Andre Porchet explains upcoming strategy regarding competition, new products and potential acquisitions CAIRO: It doesn t require much thought to connect the timing of Nestle s recent launch of a high-end product within its chilled dairy sector, to the expected competition with local newcomer and international leader of manufactured yogurt, Dannon. But according to Nestle executives, although competition is one factor, the company is driven by consumer needs and its multi-tiered strategy. We always want to be ahead of competition. But the main driver shouldn t be competition; it should be the consumer, says Nestle Egypt CEO Andre Porchet. Tailoring products to local tastes, needs and preferences is a standard approach. We ve been present in Egypt since 1988 and we have developed products according to the local taste and according to what we have in other countries, adds Porchet. Before and following the launch of new products, tests are carried out to ensure proper market positions (60 percent preference of company products). When test results are not favorable, Porchet explains, We improve the recipe through application groups. Company officials stressed that their new product, Nesvita, is tailored to Egyptian tastes. Egyptians prefer the creamy taste of yogurt, Nestle said, and thus the product was manufactured accordingly. Porchet also points to the company s management strategy: the multi-level approach. You have the premium markets, you have the mainstream and you have affordable, accessible popularly positioned type of products, Porchet explains. So if you look at the yogurt, you have plain yogurt in a small package as very affordable for a mass market and then [the recently launched high-end] Nesvita with the branded active benefits of enolin and bifidus as a premium. As part of the company s pro-wellness strategy, Good Life, Good Food, Nesvita is a value-added product within the yogurt sector offering better and healthier digestion through the addition of inulin and bifidus. Within the local industry of plain yogurt, Nestle enjoys a strong number two position, according to the official company profile. Although within the industry of manufactured yogurt Nestle comes second to Juhayna, research shows that small-scale producers of balady (local) yogurt account for the bulk of local consumption of plain yogurt. Company officials say that the market can handle the upcoming competition in spite of Egyptians relative low consumption of yogurt because manufacturers will be taking from the market share of the balady yogurt producers. While both companies, Nestle and Juhayna, have been doing their best to raise awareness of the pros of manufactured yogurt versus the less hygienic process of making balady yogurt, often referred to as underground production, the competition is better seen in value-added products like the different versions of sweetened and fruit yogurt and drink yogurt. Nestle is moving from a primary process of agricultural product into a value-added manufacture, Porchet notes. It is this expansion in value-added products that might provide Nestle with a competitive edge. Porchet, however, notes other plans. The growth of the company can only come through acquisition, integration of local venues . and the development of new product categories, he says. Noting plans to introduce more products within different sectors, Porchet also highlights the importance of acquisitions. Nestle in Egypt is based on acquisitions, he says. The company inaugurated its presence in the country with the purchase of the shareholding majority of Industrial Du Froid, local producer of ice cream and yogurt in 1988. Seven years later the company purchased Dolce for Food Industries, also an ice cream producer. By acquiring the license for the Movenpick brand in 2004, Nestle Egypt became a market leader in manufacturing different ice cream brands and products; the ice cream sector accounts for 35 percent of Nestle Egypt s portfolio. Porchet says there is always the possibility of future acquisitions with opportunities that are interesting for the company and for the potential partner. He adds, We also have to focus and create the critical mass. This, he explains, has yet to be achieved throughout the company s current portfolio. There are also plans to enhance Nestle Egypt s manufacturing capacity to increase its exports to neighboring countries; local company factories produce a range of dry culinary goods. That s a way to grow, not necessarily within the Egyptian boundaries, with the Egyptian consumer, Porchet says, But taking those products into other consumption environments, such as the Horn of Africa. He adds that We have a tremendous potential here in Egypt, saying the company has opportunities to develop the market. More research to better understand consumers culinary preferences is definitely in Nestle s plans, according to Porchet. We need to get proper consumer insights so that we know what we can make available. In the food business unit you need to understand how people eat, why they eat, what [and] when.
