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Nestlé Expand Investment to Serve Rising Demands

Nestlé Spends 4.5 Billion Baht to Expand Investment in Three Factories in Thailand to Serve Rising Demands Ready to Accelerate in E-Commerce Market to Meet the Needs of Modern Consumer Lifestyles
Nestlé has announced its investment strategy for long-term growth in Thailand, investing over 4.5 billion baht to expand production at three factories that manufacture pet food, ice cream products, and UHT beverages. This major movement will strengthen Nestle’s portfolio to offer a wider range of high-quality products to Thai consumers by focusing on environmentally-friendly innovations and breakthroughs. It will also reinforce the company’s leadership in innovation while aligning with Nestlé’s global sustainability goals. The company has allocated another 50 million baht to its eBusiness to meet consumers’ changing lifestyles.

Mr. Victor Seah, Chairman & Chief Executive Officer of Nestlé Indochina, said, “Even though this is a challenging year, Nestlé believes in the Thai market and sees strong potential for long-term growth. This is why we invested in three key factories: our Amata Factory, Bangchan Factory, and Navanakorn 7 UHT Plant. They will serve increased demand in the pet food, ice cream, and UHT beverage markets. Building on Thai consumer insights, we shaped our corporate strategy to be an innovation-driven company to drive business and offer tastier and healthier choices that satisfy Thai consumer needs. We are also prioritizing sustainability, which reflects Nestlé’s Purpose of unlocking the power of food to enhance quality of life for everyone, today and for generations to come.”

From Consumer Insights to an Investment Strategy for the Future
Research shows five key changes in Thai consumer lifestyles: i) Paying more attention to healthy foods and seeking products that can strengthen their immunity; ii) Looking for personal indulgence to treat themselves; iii) As the economic situation gets tougher, switching to products that offer greater value for money; iv) An increased focus on environmental concerns; and v) E-commerce and food delivery are thriving as consumers avoid going out when possible. Nestlé used these insights as the foundation to strategize its business operations to be in line with current market conditions.

Investing in a New Amata Factory, Strengthening Pet Food Portfolio
Today, more people are treating pets as friends. This has resulted in an increased demand for pet food in Thailand. Even with the COVID-19 pandemic, while many consumers reduced spending in other categories, they still see pet food as a necessity. This is similar to the global trend, which shows growth in the premium pet food segment as consumers are willing to pay for better quality and premium products for their pets. Nestlé is investing 2,550 million baht to build a new factory to increase production capacity and strengthen its pet food portfolio. Production will start in mid-2021.

investing for the future
Expanding Production Lines at Bangchan Factory, Introducing Product Innovations to the Market
Nestlé’s Bangchan Factory produces ice cream. To satisfy consumers’ rising indulgence trend, Nestlé continually introduces exciting innovations into the ice cream market, such as mochi ice cream that rides on the market trend of Korean and Japanese ice cream flavors. Nestlé introduced the first mochi ice cream in the Thai market, which received excellent feedback from the young generation, along with Kit Kat and Oreo ice cream. The company is also the pioneer in using paper wrappers for its Nestlé Extreme Nama product range, the first packaging innovation of this type in the Thai market and for Nestlé worldwide. Over the past several years, Nestlé’s ice cream business has seen significant growth. Nestlé has allocated a budget of 440 million baht to expand production lines at the Bangchan Factory in October this year.

Building a New UHT Plant, Delivering Healthy Products with Green Packaging
The new Navanakorn 7 UHT plant is dedicated to producing Nestlé’s UHT product range such as MILO and Bear Brand. UHT products are one of Nestlé’s growth drivers. Research from Nielsen shows that UHT products in the Cow’s Milk and Chocolate Malt Beverage categories will grow at close to 3% over the next three years, demonstrating Thai consumers’ preference for on-the-go products that are healthy and convenient. To capture this market opportunity, Nestlé allocated 1,530 million baht to build a new UHT plant, which began ramping up production in May 2020. This state-of-the-art facility reflects the global eco-trend by introducing recyclable packaging innovations. For example, MILO UHT is the first UHT product in Thailand that comes with a bendable paper straw, which aims to eliminate the use of over 500 million plastic straws in 2021.

In addition to supporting Nestlé’s global ambition to have 100% recyclable or reusable packaging by 2025, these three factories have environmentally-friendly production processes that reduce the company’s carbon footprint, energy use, water consumption, and greenhouse gas emissions while creating zero landfill.

Nestlé has also invested in the digitalization of its production lines by equipping them with advanced digital cameras. The cameras monitor the filling and packing lines to ensure flawless operation for greater efficiency, plus full control to deliver quality products to consumers.

Adopting Advanced Technology to Drive E-commerce
“E-commerce in Thailand is booming. Before COVID-19, the e-commerce market was expected to grow 30%. But during COVID-19, we saw acceleration across all categories. Consumers have embraced the convenience of ordering groceries and food online, which has led to very positive online sales results that are two times higher than the target for 2020.”

“To respond to digital trends, Nestlé established an eBusiness team in 2018. Since then, we have made ongoing investments in both people and systems, with a total investment this year of 50 million baht. Our eBusiness team has nearly doubled in size. We continue to provide the best tools and conduct training with the support of our agency partners to enhance our team’s capabilities, so we can lead in responding to the fast-changing needs of modern consumers.”

“In addition, we have invested in building up our own marketing and advertising technology and data management systems. This will allow us to offer more personalized services, products, and communications that suit consumers’ needs,” concluded Mr. Seah.