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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Nestlé    NESN   CH0038863350

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Nestle : banks on innovation in Indochina

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11/06/2018 | 04:11am EST

NESTLE INDOCHINAS new chairman and chief executive officer has set his sights on fine-tuning the food company into a competitive organisation with a balanced portfolio and market contribution in the region.

The company will focus on launching new innovations, particularly with tastier and healthier products, as a key mechanism to ignite business growth. The move is in line with Nestles global purpose of Enhancing Quality of Life and Contributing to a Healthier Future.

Victor Seah, the new chairman and chief executive officer of Nestle Indochina, who took the reins at the Bangkok office in May this year, said: We want to be recognised as an innovation company that will continue to offer innovative products and services to consumers in order to drive growth and attract the best talents in the country to come and work for us.

Before being appointed chairman and CEO of Nestle Indochina, Seah was vice president and regional manager for Southeast Asia based at Nestles headquarters in Switzerland.

In Southeast Asia, we are focusing on five different markets Malaysia/Singapore as one market, Indonesia, the Philippines, Indochina [which includes Thailand, Myanmar, Cambodia, and Laos], and Vietnam, he said. Seah said that Nestle separated Vietnam as an independent market about a year ago, in line with the companys expansion strategy.

We see big potential for the Southeast Asia market, which has a huge population of more than 625 million. We want to continue to drive growth in Indochina, particularly in Myanmar and Cambodia where the company has posted annual growth of 40 per cent and 25 per cent respectively in sales revenue, Seah said.

Nestle currently has representative offices in Cambodia and Laos. The company, however, has its own operating company as well as a factory in Myanmar that produces powdered beverages Milo, Nescafe and Bear Brand products.

We have just launched the Bear Brand enriched malted milk in Myanmar, the first country in the world. Our strategy in Myanmar is to launch four to five different categories at once. This is quite different from the previous sequential launch in other countries, when we introduced our products one after another, said Seah.

He said that Nestle has five focused categories to start business in Myanmar: Nescafe coffee, Milo, Bear Brand, Lactogen and Cerelac.

In Southeast Asia, we have two markets the Philippines and Malaysia/Singapore which have an established and balanced portfolio of key brands such as Milo, Nescafe, Maggi and Bear Brand, he said.

In Thailand, more than 50 per cent of our portfolio is from our Nescafe coffee business, said Seah.

My ambition is to grow other product categories to make our portfolio more balanced, said Seah, adding that this does not mean that the company will take away its focus from the coffee business.

Seah also intends to accelerate growth in liquid products like Milo, Bear Brand and Nescafe ready-to-drink, targeting double-digit growth, while also offering products that fit the fast-growing convenience channel such as ice cream and confectionery. The company will also offer in the long-term healthy ageing products to add life to the years of senior citizens.

Almost 80 per cent of the Nestles revenue in Thailand is from locally managed businesses, which are coffee, dairy products, ice cream, confectionary and food.

The rest are from regionally managed businesses, which are Wyeth infant nutrition, Nestle infant nutrition, Pet Care, and Nestle Professional, which is a food service business; and its globally managed businesses comprising Nestle Pure Life and Minere mineral drinking water, Nespresso coffee, Boost and Nutren consumer healthcare products, and a joint venture business of Koko Krunch breakfast cereals.

Seah said that the Thailand market for fast-moving consumer goods is very flat.

The only way to ignite growth in Thailand is through innovation, he said. He gave the example of new innovations being launched by Nestle in Thailand, including Nescafe Americano, which was launched in March this year to serve the iced-coffee drinker; Milo three-in-one with less sugar and Nesvita germinated riceberry to serve more health-conscious consumers; as well as the various Nestle ice creams such as Oreo, Mochi and Thai Tea.

The company also will be investing Bt250 million to accelerate Nescafe Dolce Gusto, a coffee capsule system.

We [Thailand] were the first market in the world to launch three-in-one coffee in 1996, said Seah.

He added that the line up of new innovations to be launched in Thailand next year would embrace consumer trends in Thailand and in the world such as nitro and cold brew coffee trends.

We expect about 50 per cent of our growth will be from new launches, said Seah.

He said that the launch of new innovations, which go beyond just product itself, would also include new business models.

We launched our new Nescafe Hub at the BTS station in Chidlom in July this year to offer fresh coffee to consumers on the go. The hub will help the company to market the brand, which is relevant to young people, as well as drive a new business model to gain revenue, said Seah.

We also launched the new Nescafe Gold Barista coffee machine to reach our office customers so that they can enjoy a Barista-style coffee in their workplace.

(c) 2018 The Jordan Times. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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Financials (CHF)
Sales 2018 91 422 M
EBIT 2018 14 863 M
Net income 2018 11 276 M
Debt 2018 28 127 M
Yield 2018 2,95%
P/E ratio 2018 22,99
P/E ratio 2019 21,50
EV / Sales 2018 3,14x
EV / Sales 2019 3,05x
Capitalization 259 B
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Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 88,1  CHF
Spread / Average Target 4,4%
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Ulf Mark Schneider Chief Executive Officer & Director
jeff hamilton President
Paul Bulcke Chairman
Magdi Batato Executive Vice President-Operations
François-Xavier Michel Marie Roger Chief Financial Officer & Executive Vice President
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NESTLÉ5.76%259 525
DANONE1.37%48 522
GENERAL MILLS10.35%25 642