Ferré & Consulting Blog (English Version)

The Chinese Government has cleared Nestlé’s bid to acquire a majority stake in Singapore-listed confectionery manufacturer Hsu Fu Chi for $1.7bn, following the completion of an anti-monopoly review.

In July, Nestlé entered into a partnership agreement with Hsu Fu Chi to buy a 60% stake in the company, as part of its strategy to generate over 45% of its revenue from emerging markets by 2020.

Once completed, Hsu Fu Chi will hold the remaining stake, and its current CEO and chairman Hsu Chen will head the company in the new partnership.

Nestlé will buy 43.5% of Hsu Fu Chi shares from independent shareholders for S$4.35 (US$3.38) per share, a premium of 8.7% on the 1 July closing price.

Hsu Fu Chi spokeswoman said that the company expects the courts in the Cayman Islands, where the company is registered, would soon clear its delisting from Singapore Stock Exchange, and expects the transaction, Nestlé’s biggest in China, to close by the end of December.

The clearance for Nestlé’s latest bid comes a month after Beijing approved Yum Brand’s takeover of restaurant company Little Sheep, easing concerns over its hardline stance towards acquistion of local brands by foreign companies.

Hsu Fu Chi, which manufactures sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack sachima, operates four large-scale factories in China and reported sales of CHF669m ($803m) in 2010.

Nestlé China manufactures culinary products, soluble coffee, bottled water and milk powder, and operates 23 factories and two R&D centres, with sales of CHF2.8bn ($3.3bn) in 2010.

Early this year, the Swiss company acquired a 60% stake in food-maker Yinlu Food, which produces ready-to-drink peanut milk and ready-to-eat canned rice porridge.

Caption: The clearance for Nestlé’s bid for a 60% stake in Hsu Fu Chi eases concerns over Beijing’s hardline stance towards foreign firms acquiring local brands.

Source: Food Processing Technology

Companies Hsu Fu Chi, Nestle

Nestle is launching a new brand of luxury chocolates selected to match individual preferences that consumers will order online.

“What we are offering is the perfect personalised chocolate,” says Cedric Lacroix, director of Nestle’s Chocolate Centre of Excellence in Broc, Switzerland.

Nestle, the world’s biggest food group and global leader in dark chocolate, opened the research centre in Broc in 2009 and has said the economic woes of recent years have not hurt demand for premium chocolate much, calling it an “affordable treat” in difficult times.

The Swiss group presented its new chocolates at its 9-month press conference in Paris, asking journalists to taste different flavours and handing them little slips of paper to help them remember their chocolate identity.

Nestle said consumers will first order a box of five “tasting” chocolates with hints of milk, caramel, nut, fruit, flowers and vanilla to determine their preferences which they rate online following a set of instructions.

“Chocolate has certain attributes that people distinguish in different ways. It is like tasting wine,” Lacroix said.

The Nestle Maison Cailler brand will then use the results to make a selection that suits an individual’s taste from a set of 12 different chocolates that are sent directly to the consumer from the factory in Broc.

“We will be able to fine tune the Maison Cailler offering according to consumer feedback,” Lacroix said.

The recipients can then share their favoured “chocolate personality” with friends through their Facebook profile.

Maison Cailler, which will launch at the beginning of 2012 in Switzerland and Liechtenstein, also plans to set up “profiling stations” for its chocolates at a number of locations around the country, such as five star hotels.

Source: Reuters

Chocolate luxury chocolates, Nestle

Nestlé’s scheme to expand operations at its Product Technology Centre in York cleared the final hurdle last week at a planning meeting of City of York Council.

“Confectionery is an exciting business which moves at a rapid pace,” said Stefan Palzer, director of the technology centre. “This expansion will allow us to accelerate and intensify confectionery product development, using sustainable and high quality raw materials, innovative manufacturing processes and reliable and efficient equipment.”

Councillor James Alexander, Labour Leader of the council, told confectionerynews.com: “This was a vote of confidence for a good planning scheme from an important York employer and, of course, an opportunity not to be missed for economic growth and increasing jobs.”

Global network

The York centre is part of Nestlé’s global network of specialist facilities that each focus on a different area of interest. The development work at York targets confectionery, including new chocolate products, fruit and wafer-based confectionery, coatings and chocolate ingredients for ice cream products.

Last week’s planning decision paves the way for an extension of the site’s pilot plant, where technologists test new technologies and processes at a smaller scale before moving full-scale production operations. The site’s sensory testing facility will also benefit from an extension.

Nestlé said that the planned extension has been designed to minimise waste while maximising output.

The company added that the design will be built according to the principles of lean construction, which is a global standard for designing and constructing more efficient and environmentally sustainable production systems.

Long relationship

Since Nestlé’s acquisition of York-based Rowntree Macktinosh in 1988, the city has played a role in developing confectionery products for Nestlé’s global operations, as well as manufacturing household names for the UK market, including Kit Kat, Aero, and Milky Bar.

Nestlé cut around 600 jobs from its workforce in the city five years ago, prompting fears that it might withdraw altogether. However, the firm pledged to continue investing in York and today employs around 1800 people.

“York has a long and rich heritage in the world of chocolate and confectionery,” added Palzer. “The city’s early confectionery companies pioneered the ideas and technology to produce quality products on a mass scale, a tradition which Nestlé continues today.”

In a separate development, the council granted permission earlier this year for Nestlé to redevelop land at its main factory site in York with a scheme including affordable housing, offices, retail units and community facilities. The move is expected to create nearly 600 jobs.

Source: Confectionery News

Companies expansion plans, Nestle

Indonesia is the focus of an extension of Nestlé’s sustainable Cocoa Plan initiative, with the Swiss food group aiming to pump $4m (€2.7m) into bean production in that country.

The KitKat maker said that its objective is to increase cocoa productivity at farmer level by 30 per cent in that country over the next four years, through training farmers, providing plant expertise, and supporting supply chain transparency.

Nestlé said that the initiative will also involve projects related to nutrition education, water, and rural development.

Data from the International Cocoa Organization shows that Indonesia, with total production of 550,000 tonnes of cocoa beans in 2010, was the world’s third largest cocoa producer.

ADM programme

June saw leading cocoa processor Archer Daniels Midland (ADM) announce that it had kick-started its Ivory Coast sustainable cocoa initiative – Serap – in Indonesia in a bid to boost cocoa quality from growers in that region.

A spokesperson for the cocoa processor told then that sustainability is essential to ensuring the long term future of the country’s cocoa industry.

“In Indonesia, cocoa farming is the main source of income for more than 600,000 smallholder farmers and their families, most of whom are located on the island of Sulawesi.”

Serap, which provides training and financial incentives to help cocoa farmers implement sustainable farming practices, will involve the collaboration of the Indonesian Cocoa and Coffee Research Institute (ICCRI), said ADM.

Clarity in the supply chain

As the consumer movement for sustainable and fair trade type products gains momentum, chocolate and cocoa suppliers are receiving more and more requests from customers for clarity in the supply chain.

The global commodities giant said that its confectioner customer base will gain through an additional source of certified sustainable cocoa products.

When asked about its five-year target for sustainable cocoa tonnage arising out of the programme in Indonesia, the ADM spokesperson said:

“Tonnages are always difficult to forecast as the programme roll-out depends on many different factors. We do know that Serap participants achieve generally a higher standard of cocoa bean quality due to all the support provided through the programme.”

Ripe for investment

Meanwhile, a spokesperson from the Indonesia Investment Coordinating Board (BKPM) told  recently that the Indonesian cocoa processing sector is ripe for further investment from multinational food manufacturers.

BKPM said that cocoa plantations in the country have experienced rapid development since the early 1980s, culminating in a plantation area reaching 1.5m hectares at the end of 2010.

Indonesia, continued the Board, makes a good base for cocoa processors as the country provides both a production base and a domestic market for cocoa.

Ivory Coast

Earlier this month, Nestlé announced that it was increasing its donations of disease-resistant cocoa trees to farmers in Ivory Coast in a bid to boost the quality of the beans that are produced in that country.

The chocolate giant said the plantlets can help farmers rejuvenate their farms and increase productivity by replacing old, low-yield, disease-prone trees.

Source: Confectionery News

Companies, Ingredients cocoa, Nestle

Nestlé has paid out bought €1.2bn for a majority stake in leading Chinese confectionery maker Hsu Fu Chi, with the Swiss group flagging up access to extensive production capabilities and a major distribution network as its wins.

Last week, the Swiss group confirmed to ConfectioneryNews.com that it was in talks with the Singapore listed Chinese sugar confectionery and snacks manufacturer.

60 per cent stake

Under the deal, Nestlé said it intends to acquire 60 per cent of the family owned Hsu Fu Chi, whilst the Hsu family will own the remaining 40 per cent. The current CEO and chairman, Hsu Chen, will stay in charge, said the food giant.

The completion of the deal is subject to regulatory approval by the Chinese competition authorities.

Andrew Wood, senior research analyst at Sanford Bernstein said the confectionery category has been one area where Nestlé is a second-tier player behind strong category leaders in Mars/Wrigley and Kraft/Cadbury.

In relation to this deal, the analyst notes:

“Clearly this highlights Nestlé’s continued focus on growing its emerging markets business…through both organic growth and small, bolt-on M&A. We are supportive of this as, despite a strong emerging markets (Ems) business representing almost 40 per cent of sales, Nestlé continues to lag its European Food peers (Danone and Unilever) who both have over 50 per cent of sales in the EMs.

“We are pleased to see that Nestlé is clearly dedicated to the confectionery category, as we have always believed it is an attractive category in general…and…. a particularly strong category in China.”

Hsu Fu Chi

Hsu Fu Chi was started in 1992 by four Taiwanese brothers. Market watchers, Sanford Bernstein, estimates that it is the No 2 confectionery player in China with 4.2 per cent market share (trailing only Mars, which has a 15.5 per cent share).

In 2010, it had reported sales of €566m and an EBIT margin of 17.3 per cent.

Operating four large-scale factories in China and employing 16,000 people, the firm makes sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack sachima.

Analyst Wood said the decision of Nestlé management to leave the current CEO Hsu Chen in charge will “enable the company to continue to feel ‘local’, while allowing it to also benefit from Nestlé’s infrastructure, organisation, resources.”

He highlights that at some point in the future Nestlé “may have the opportunity to more fully integrate Hsu Fu Chi’s business into its overall China business…and thereby extract significant synergies.”

Chinese drinks market

In April, the global food giant announced that it has acquired a 60 per cent stake in Yinlu Foods Group, well-established brand in China and a major distributor of ready-to-drink peanut milk and instant canned rice porridge.

Nestlé reported sales of €2.27bn in China in 2010, due to the growth there of its global brands including Nescafé, Nan, Maggi, KitKat as well as a hike in demand for local brands such as Haoji and Totole.

 Source: Confectionery News

Companies Hsu Fu Chi, Nestle

When it comes to innovation, the idea of “partner or perish” has to become the new mantra for the food industry, according to a review published by Nestlé scientists.

The report, published in Journal of Food Science, said that innovation partnership must start with co-innovation already in mind; suggesting that partnerships “are paramount for cross-fertilization and synergy.”

“Innovation is a necessity—probably the only way to survive. The new mantra ‘innovate or die’ combined with open innovation could be the leitmotif for today’s companies,” said the authors, led by first author Helmut Traitler, former vice president of Innovation Partnerships at Nestlé; now CEO at Life2Years, Inc.

“Every innovation program should ultimately furnish an increase in a profit function that can either be tangible or take another form, such as increased market share, expanding consumer base, perceived value or image, consumer experience, and so on,” they said.

Open innovation

Traitler and his colleagues said that in order to keep pace with “growing technological complexity, bottom-line pressure, acceleration of new product development, changing consumer expectations, and an unstable business environment …innovation is one of the main resources to create, cope with and sustain a competitive advantage.”

The idea of open innovation is established on the reality that, in a world of widely distributed knowledge and faster rates of development, industry can no longer afford to rely on their own research, and so needs to make the most of outside sources.

The authors explained that open innovation “diversifies risks and shares both market and technological uncertainties of innovation.” However, they noted that ‘open innovation’ has become “an over-exploited buzzword.”

The Nestlé way

The authors explained that adapting an open innovation philosophy “was not easy for Nestlé”; nevertheless, they said that a paradigm shift was recognized in 2006 with a strategic change to create Nestlé’s Innovation Partnerships (INP) group, originally headed by Traitler.

They said that the INP group allowed the company to turn to the outside world for bigger, better, bolder, and faster innovation.

“Its execution and implementation were prompted by the recognition that universities, academia, small startups, biotech companies, and large industrial suppliers are important sources of co–development and partnerships,” explained Traitler and co-workers.

“In particular, academia has been shown to play a very significant role in most breakthroughs and provides a natural and critical partner,” they added

The authors said that the Innovation Partnerships, along with a ‘Sharing-is-Winning’ model “represent a paradigm shift toward accelerating co-development of sustainable innovation, with alignment of the entire value chain with consumer-centric innovations being one of its main pillars.”

Integration

Traitler and his colleagues explained that integrating the whole innovation process, that is, from conception to final outcome, “is a cardinal requirement” if companies want to thrive in the global market

They said that the typical ‘not invented here’ syndrome has ceased to be an effective option for industry. Instead a sustainable co-development and innovation “becomes feasible with a change in mindset from ‘attempting to do everything within’ to ‘seeking out the most appropriate partners for success’,” said Traitler and his co-workers.

Source: Journal of Food Science

Companies, Research Nestle, R&D

Nestlé inaugurated a new factory in Dubai in December 2010. The $136m facility is located at TechnoPark and will serve markets across the UAE.

Nestle’s TechnoPark facility is the first confectionery plant built by the company in a decade and is expected to be the third largest Kit Kat manufacturing plant worldwide. The factory will manufacture, can and package Nestle powder milk Nido, Kit Kats and the bottled water Pure Life.

The facility is intended to meet the demand for Nestle products in the region. There is provision to expand the facility for exports to other regions. The factory is an extension of a multi-million dollar facility opened in March 2010 to manufacture powdered milk and package imported Mackintosh’s Quality Street chocolates.

Facility details

Plans to construct a facility at TechnoPark were initiated in 2007. The construction of the facility was started in 2008 and completed in 2010.

The manufacturing facility is spread over 1m ft² and the building covers an area of 515,000ft². The facility currently employs 555 people. The production capacity of the plant is expected to be more than 100,000t a year.

The facility accommodates Nestlé’s Regional Microbiological Laboratory which specialises in analysing of salmonella. The laboratory began operations in 2009 and serves the Nestle factories in the Middle East region. It is also used as a training facility for various government bodies of the UAE.

Site

The TechnoPark is strategically located between a seaport and an international airport, and is to the west of Jafza (Jebel Ali Free Zone).

It enjoys the status of a special economic zone and offers 20m m² space for industrial development and 1m m² for science and technology core. The zone supports the water, health, energy, engineering, logistics and mobility sectors.

The TechnoPark is part of Economic Zones World, which is an arm of Dubai World.

Located in TechnoPark, the Nestle facility gets the advantage of 100% foreign ownership, a 0% corporate tax rate, the option to repatriate capital and profits, and flexibility in using international currency and hiring foreign employees.

Contractors

Amana Contracting and Steel Buildings was awarded the construction contract. The turnkey project was completed in 390 days.

Products

Nido powder milk has a few variants including Nido Laban and Nido Essentia. Essentia is available in 400g and 2,250g cartons.

Production of this is soon going to begin in Dubai. Kit Kat comes in various options such as Caramel, Chunky and Senses. Pure Life bottled water is produced under the company’s Nestle Waters arm.

Nestle Middle East

Nestle has been in the Middle East for 75 years, its first operation in the area opened in Lebanon in 1934. Nestle Middle East was founded in 1997 with a facility in Jafza. Nestlé Middle East operates in 13 countries including Iran, Iraq and Yemen.

Nestle owns 17 factories and 37 offices in the region and employs 7,000 people.

It has invested $400m since 1997 in the region, which contributed $1.4bn to the company’s total turnover in 2009. It is expected to grow to $3.3bn by 2017.

Nestle Middle East produces the Nido, Cerelac, Nescafé, Maggi, Chocapic, Quality Street, Cheerios, Nestle Fitness, Cornflakes and Nesquik brands.

Nestlé also established a sensory lab unit for innovation and new products in Al Quoz, Dubai in 2010. This unit is equipped with sensory technology and acts as a centre to carry out sensory profile analysis of confectionery, dairy products, and coffee.

Companies, Confectionery confectionery plant, Dubai, Nestle

Confectionery giants Nestle and Cadbury are increasing the recommended retail price of a number of their chocolate bars, it has been reported.

A rise of around seven per cent will take place on some of the companies’ bestselling bars, including Cadbury’s Dairy Milk and Wispa, and Nestle’s Kit Kat and Yorkie, the Grocer reports.

In 2007, when the economic downturn hit, prices were hiked for the first time.

There will be a 3p rise in Dairy Milk prices, meaning the bar is 30 per cent more expensive than it was three years ago.

“My worry is that chocolate is becoming a luxury item rather than an affordable treat,” one wholesaler told the news provider. “We are beginning to reach the point now where people consider small bars to be expensive and we are seeing sales through independents declining.”

“We have taken the decision to increase prices because of economic factors including ingredient costs,” said a Cadbury spokesman.

He denied Kraft Foods’ hostile takeover of the confectioner, which took place in February this year, has led to the rise in prices.

Source: Ingredients Network

Confectionery Cadbury, chocolate bars, Nestle, prices

With a global network of 29 research and development (R&D) centres, Nestlé has recently announced its plans to establish its 30th R&D centre in India. The facility will be built in Manesar, close to Nestlé India’s headquarters in Gurgaon, and will be operational by July 2012. The company has planned an investment of around Rs 230 crore in developing the centre, which will have an area of around 2,00,000 sq.ft.

The new centre will focus on popularly positioned products (PPPs), especially for India. PPPs are the ones that meet the specific needs of consumers with lower income levels, by offering them high-quality, nutritionally enhanced products at affordable prices. “Nestlé India has benefited from its global R&D network, with innovative PPPs such as Maggi Noodles and Chotu Munch chocolate confectionery,” said Antonio Helio Wasyzk, CMD, Nestlé India, while making the announcement.
“This new centre will facilitate innovation in a wide variety of foods, including culinary, cereals beverages and dairy products,” said Klaus Zimmermann, head of Nestlé R&D centres worldwide.

“Nestlé India is the country’s leading nutrition, health and wellness company. Our continuous access to Nestlé’s global R&D has significantly contributed to our performance and Nestlé’s decision to establish an R&D centre in India will provide additional competitive advantage in the future. It will help us to accelerate the company’s growth and contribute towards reducing nutritional deficiencies in India,” said Wasyzk.

Highlighting the importance of R&D in the company’s growth, he shared last year over a third of all Nestlé sales came from the innovations launched since 2007.
Revealing further details, Zimmermann said, “The site has been chosen for its proximity to Nestlé India’s headquarters. The proximity will help in facilitating cross-functional team work and ensure the R&D programme is relevant. The centre in India will initially have a team of about 40 scientists and engineers and we expect this number to grow significantly in the coming years.”

The Manesar R&D centre will work in collaboration with Nestlé’s research centres in Switzerland and Singapore, the product technology centre in Germany and the centre facilitating research in the Unites States. Besides, the centre will also work in association with Indian universities and research institutes in order to expand its knowledge-base and fast-track innovation.

Sharing Nestlés approach towards the much debated genetically modified (GM) food ingredients, Zimmermann said, “We have always followed the policies accepted by consumers in their respected countries and we will do the same in India as well. However, we are open to the use of GM foods/crops as we feel that in the long run this technology will provide food security.”

Apart from the plans for the R&D centre, Wasyzk said the company was investing around Rs 350 crore in building up a manufacturing unit for noodles in Karnataka “and in the future we plan to open more such factories”.

Companies India, Nestle, R&D

Swiss food and beverage giant Nestle is looking for new chocolate tasters for its factory in York, UK.

Applicants have to undergo a rigorous selection process before they are chosen for the paid role, a Nestle spokesperson told the York Press.

It is important that prospective workers are able to tell the difference between sourness and bitterness, which is apparently not something everyone can do.

The tasters also need to be able to articulate themselves and clearly describe the product they are trying out and be able to work as part of a team.

“We believe that the talents of our tasters play a vital role. Nestle produces some of the biggest and most popular confectionery products made to the highest standard. We need passionate individuals with high sensory skills and good communication skills to ensure that taste and quality is not compromised,” the spokesperson told the news provider.

This week, Nestle announced it would be increasing its recycling target in Europe.

Previously, it aimed to make 90 per cent of its packaging recyclable but it has increased this to 95 per cent now.

Source: Ingredients network

Chocolate chocolate tasters, Nestle, United Kingdom