Nestlé purchases majority share of food & beverage company in China
Aims to caffeinate China for larger market share in coffee market.
November 25, 2011
by Canadian Packaging Staff
There are certain truisms in the world: death, taxes, and to never start a land war in Asia. You can add to that—Nestlé SA, the global food, nutrition and wellness company, is looking for a greater market share. Period.
Nestlé announced on November 18, 2011 that it has completed a deal to own 60 per cent of the Chinese food and beverage company, Xiamen Yinlu Foods Co., Ltd.
It’s no secret that companies see great potential in the China market, with Roland Decorvet, chairman and chief executive officer for Nestlé China simply stating: “China is the future.”
Nestlé SA plans to double the scale of its investment in the Chinese coffee market during the next three years.
Decorvet continues: “More money will be spent in China every year and it is going to last for few years from now.”
Despite the size of the China market, Nestlé’s foray into the territory is still growing, as total profits from its China operations in 2010 only made up 2.55 per cent of its global business. But, Nestlé has a plan.
Decorvet says its sales of coffee, milk, waffles and confectionery has been climbing and will continue to grow in the Chinese market in the future. He adds that Nestlé’s coffee products have an 80 per cent market share in the Chinese market, while its new coffee factory in Shandong will be completed and launched in 2013. The deal with Xiamen Yinlu will open up more opportunities for Nestlé’s confectionery business.
“We expect annual profits of RMB30 billion (Cdn/US $4.7-billion) from Nestlé and Xiamen Yinlu by the end of 2016,” Decorvet says.