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NEWS UPDATES 3 July 2010

Nestle invests in new Philippine plant

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TO quell an Indonesian news report of a pull out, the Philippine unit of Swiss food and beverage giant Nestlé announced on Friday that it will invest in a new facility South of Manila to serve the growing domestic demand for its products.

In a briefing, John Miller, Nestlé Philippines Inc. chairman and chief executive officer (CEO), said the company has leased a 27-hectare tract of land in Tanauan City, where P4.3 billion will be infused for the initial phase of a new plant that will churn out an annual 64,000 metric tons of Coffee-Mate and Bear Brand when operations begin by March 2012.

Miller said the construction of the Tanauan factory starts this month.

He said 170 people initially would be hired, and up to 500 people will be employed when the new plant’s operations are in full blast.

Miller said the existing Cagayan de Oro plant—which manufactures Bear Brand—is already using its full capacity of about 80,000 metric tons.

He said the strong domestic demand for Coffee-Mate necessitated the country’s own manufacturing plant for the product. At present, Nestlé Philippines imports up to 27,000 metric tons a year from its Thailand affiliate.

Miller said the Philippines is the world’s second-largest consumer of Coffee-Mate, next to the US.

“We want to become self-sufficient [in Coffee-mate supply],” he said.

“We intend to bring other products to this site,” the executive said, adding that Nestle Philippines plans to manufacture additional brands in the upcoming Tanauan facility.

Miller said the new factory would be developed in three phases, adding that production “volumes could go up to over 100,000 metric tons.”

He added that the company would also undertake a P150-million upgrading of its Cabuyao plant, as well as a P500-million manufacturing capacity improvement project in the Cagayan de Oro site.

The company said sales of Coffee-Mate and Bear Brand in the country this year are expected to rise 8 percent and 19 percent, respectively.

Exports of Bear Brand, under the brand name Everyday, are projected to increase by a third this year, the company added.

Bear Brand corners up to 43 percent of the children’s powdered milk category, while Coffee-Mate holds an up to 90-percent share of the domestic market.

The company’s sales last year amounted to P85.9 billion, up by about 4.37 percent from P82.3 billion the previous year. Its net income stood at P9.1 billion, over a fourth higher than the 2008 figure of P7.1 billion.

At end-May, Nestlé Philippines has a total of 3,200 employees in its four factories in Cagayan de Oro City, Lipa City, Cabuyao, Laguna and Pulilan, Bulacan.

Miller said earlier reports saying that Nestlé would transfer to Indonesia its Philippine and Malaysian operations were “categorically incorrect.”

“We have no plan to relocate our lines to Indonesia,” he said

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