Swiss giant Nestlé moves into food and beverage production

Swiss giant Nestlé moves into food and beverage production
By Tim Mclaughlin   |   Monday, 15 September 2014

Swiss food manufacturer Nestlé SA has confirmed that it is preparing to invest around US$50 million in Myanmar’s food and beverage industry over the next six years, in the latest sign yet of the Myanmar consumer market’s attractiveness to international firms.

A woman pours a Nestlé product at a previous Yangon press event. Photo: Boothee

A statement from the President’s Office issued on September 8 said that the investment will be focused on “coffee, milk and dairy products, drinking water and beverages”. The deal is pending approval from the Myanmar Investment Commission, which met Nestlé representatives in Yangon early last month.

A spokesperson for Nestlé confirmed the statement but declined to comment further on the nature of the company’s investment.

The statement came following President U Thein Sein’s September 8 tour of a Nestlé factory near Bern, Switzerland. U Thein Sein was visiting Switzerland as part of a larger three–country, 10–day tour that also included stops in Germany and the Netherlands.

Nestlé, the world’s largest food company, formed a Myanmar–based subsidiary in September 2013 to explore opportunities in the country. The Vevey–headquartered company already exports a number of its products to Myanmar.

Consumer goods manufacturers have been eager to enter Myanmar’s market of 51.4 million people since reforms were initiated three years ago and a new foreign investment law enacted in 2012.

Nestlé competitor Unilever opened a production facility in May 2013. In June 2013, soft–drink manufacturer Coca–Cola opened a bottling factory outside Yangon. Rival PepsiCo followed suit in March, opening its own bottling facility.

Danish brewer Carlsberg is expecting to open its brewery by the end of this year, as is Dutch beer manufacturer Heineken. All major projects to date have been joint ventures with a Myanmar partner.

More large–scale foreign manufacturers in food and beverages are likely to follow suit, with one more brewery likely to be announced this year.

Myanmar Investment Commission spokesperson U Aung Naing Oo said that while Heineken and Carlsberg have strong brands and internationally recognised reputations, the MIC anticipates granting a licence to one more foreign–owned or joint–venture brewery in 2014. The brewery must be built outside of a city and follow strict guidelines on food and drink safety, he said.

The domestic breweries will help meet growing demand for beer and mitigate illegal imports, he said.

U Aung Naing Oo added two foreign companies have already submitted proposals to build breweries, and the MIC is now considering the proposals.

Beer consumption is increasing in Myanmar, currently sitting at about 4 to 5 litres per capita per year in Myanmar but is expected to rise to 6 to 7 litres per year by next year, he said.

Edwin Vanderbruggen, legal partner at VDB Loit law and advisory firm, has also said that Heineken has received a nationwide permit for distribution from the MIC, marking the first time a foreign company is allowed to do distribution in Myanmar.

– Additional reporting Aye Thidar Kyaw and Jeremy Mullins

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