Nestlé South-East Asia posted solid growth last year underpinned by double-digit growth in Vietnam. The growth was based on strong momentum gained by five of its biggest brands, MILO, NESCAFÉ, MAGGI, NAN and Nestlé itself. This year, the Swiss giant plans to improve organic sales growth and underlying margins as it progresses toward its 2020 target.
Chris Johnson, Executive Vice President, Chief Executive Officer Zone, Asia, Oceania and sub-Saharan Africa (AOA), speaks to Retail News about how one of the biggest companies in the world has set its business goals for 2019 and contributes to the Vietnam’s overall socio-economic development.
Can you share the highlights of Nestlé’s business performance last year?
Nestlé Vietnam has had strong performance in the last four years and we are among the fastest growing food FMCG companies in Vietnam.
Although Vietnam is not a huge market for Nestlé, it is the fastest growing market in Asia. And its contribution to growth has been important. We have much confidence in the growth potential of Nestlé Vietnam based on a strong and growing economy and burgeoning middle class and population.
If we look at other countries, sometimes we are strong in one or two categories, but here we have a broad presence in a number of categories. MILO is the strongest brand for Nestlé Vietnam along with four other brands including NESCAFÉ, MAGGI, Nestlé itself and NAN – infant nutrition.
Last year our efforts were recognized by the government with an award for being the 59th biggest corporate tax payer from the Ministry of Finance, a Certificate of Merit for significant contribution to the FDI sector over the last 30 years in Vietnam from the Ministry of Investment and Planning, a place in the list of top 10 sustainable businesses in Vietnam by the Vietnam Council for Sustainable Development, and an award for prominent employer in manpower development from the Ministry of Labour.
This year we expect Vietnam will continue to be an important, growing contributor to Nestlé.
Nestlé Vietnam is a key contributor to not only the growth of Zone AOA but also the Nestlé Group.
What is Vietnam’s role in the development of Nestlé in Asia?
Vietnam is important not only because we have a strong business here but also because of the coffee landscape. Vietnam is the second biggest coffee producer in the world and the biggest in robusta. Nestlé is the biggest buyer of coffee in Vietnam with an annual purchase volume of 20-25 percent of the total coffee output. We also invested above $600 million into the economy via coffee purchase and exports.
In 2011 Nestlé unveiled the NESCAFÉ Plan, among whose important aspects was helping Vietnamese farmers with their crops. Our agronomists provide farmers with training in good agriculture practices and technical assistance. We have distributed 27 million high-yield plantlets since 2011, encouraged farmers to reduce water usage 20 percent and increase their income and resilience through better farming practices, and have provided 200,000 training sessions to farmers to develop the industry.
The reason we do this, the core philosophy of Nestlé, is that this is not about donations, it is good business for us that Vietnamese coffee farmers do well. That assures we have good-quality supply for the world. Vietnam is a good example of how Nestlé operates well for other countries.
How does Nestlé plan for short-term and long-term investments in Vietnam for 2019 and subsequently?
We have a long-term vision and a firm belief in the potential of the country. In 2017 we inaugurated the Bong Sen factory in North Vietnam and a new distribution center in the South.
In 2018 we further expanded our business, notably through a new distribution center in the northern province of Hung Yen and the NESCAFÉ Dolce Gusto production line in the southern province of Dong Nai. This year will be another year of growth with more and more capacity in line with our ambition in Vietnam.
Our growth priority remains, and our 2019 activities will continue our long-term strategy that is set for 2017-2020. We want to introduce new products that meet new consumer needs, and Creating Shared Values – CSV will always remain a big driver of our goals.
Once again, as the world’s top conglomerate in nutrition, health and wellness, we aspire to take a holistic view of our product offerings. This means we must improve our recipe to increase good nutrients, while reducing fat, sugar and salt. At the same time, we want to promote a healthier lifestyle for our Vietnamese consumers and Nestlé looks forward to more collaborations to fulfill this mission.
The overall plan is to continue to grow, continue to focus on our five core brands in Vietnam. We believe Nestlé Vietnam can reach mid-double-digit growth in 2019.
What activities have been undertaken in support of the United Nations’ sustainable development goals?
Since its inception in 2011, the NESCAFÉ Plan has been hailed as one of the most successful public-private partnerships by the Ministry of Agriculture and Rural Development. In eight years we have distributed over 27 million high-yield, disease-resistant plantlets to help farmers replant over 21,000 hectares of aging coffee trees.
In addition to supporting sustainable farming practices in accordance with international 4C standards, the program also assists farmers in managing coffee quality and supports them in updating market information.
We see this initiative as a win-win situation because farmers can get a better life and improve their income by 30 percent while Nestlé benefits from high-quality coffee products.
In addition to the NESCAFÉ Plan, MILO via the Activ Vietnam program in conjunction with the Ministry of Education and the Government’s Project 641 have embarked in grassroot sports development and promoting a healthier lifestyle in school.
Nestlé Vietnam provided the market with two billion fortified servings in 2018 and has been collaborating closely with the Ministry of Health and the National Institute of Nutrition in the proposal of the national Recommended Daily Allowance (RDA).
We also promote woman entrepreneurs under the NESCAFÉ Plan, improve women’s incomes in rural areas through the “Go rural” project with the Women’s Union. We are also a signatory to UN Women Empowerment Principles. We recognise that among others, gender equality and women’s empowerment are critical to Creating Shared Value for our business with a respect for diversity.
How do you view the challenge of competition from local and foreign firms in the coming years?
We always welcome competition. At the end of the day consumers benefit from competition because they have more choices. More importantly, that drives us to work hard and be competitive every day. We have been trying to do the right things in producing high-quality products while the market is becoming stronger and stronger thanks to competition.
This is your first trip to Vietnam since you took over as Executive Chief Officer Zone Asia, Oceania and sub-Saharan Africa (AOA) in January. What is your most valuable takeaway from the trip?
I have only been in the job now for about two months and Vietnam is the third market I have visited after China and India. The most valuable thing for me is to connect with the people working here. We have over 2,300 employees and I am very proud of the team here.
The next step will be making sure that Nestlé Vietnam continues to cooperate with the government and farmers to ensure successful operations and make social contributions when doing business in the country.
