Bloomberg News

Nestle Saudi Arabia Sees Sales Rise of as Much as 20% Next Year

December 18, 2012

Nestle SA (NESN), the world’s largest food company, forecasts sales in Saudia Arabia may increase as much as 20 percent next year driven by consumer demand, said Yves Manghardt, chief executive officer of Nestle Middle East.

“It’s a very important market for us,” said Manghardt in an interview yesterday in the capital Riyadh. “Nestle in Saudi Arabia contributes roughly 30 percent of our business in the Middle East.”

The Vevey, Switzerland based company, which recorded sales of about 2.5 billion riyals ($700 million) in the kingdom this year, has added bottling facilities and distribution centers in the past two years. Saudi Arabia, the Arab world’s biggest economy, has benefited from inward investment while other countries in the region grapple with civil war and political instability.

Saudi Arabia’s $597 billion economy will grow 5.1 percent this year, the second-fastest pace in seven years, according to the median forecast of 17 economists compiled by Bloomberg. By contrast, growth in the Group of 10 industrialized nations will slow to 1.27 percent from 1.31 percent, the forecasts show.

Carlyle Group LP (CG:US) in December last year bought a 42 percent stake in Saudi company Alamar Foods, which operates Dominos and Wendy’s restaurants as well as a food processing plant which supplies them.

Arab Spring

Consumer demand and investment has plunged in the past two years in the Arab world as a result of popular uprisings that led to the toppling of leaders in Tunisia, Egypt, Libya, and Yemen. Saudi Arabia’s King Abdullah spent an additional 224 billion riyals last year aimed at creating jobs, building homes and raising salaries for the armed forces.

Nestle Middle East has invested more than $400 million in the region since its inception in 1997, owning and operating 17 factories and employing 7,000 people, predicting sales to grow to $3.3 billion by 2017 from $1.4 billion in 2009.

“We have provided 230 jobs in Saudi Arabia, 37 percent of them are occupied by Saudis and we aim for that number to reach 40 percent soon,” said Roger Meguerdichian, country manager, Nestle Saudi Arabia. “Our investment in head-count will increase 30 percent in 2013.”

Nestle, whose brands include KitKat chocolate bars and bottled water Vittel, has gained 11.4 percent this year while the Swiss Market Index rose 0.6 percent.

To contact the reporter on this story: Deema Almashabi in Riyadh at dalmashabi@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net


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