Friday, 23 May 2014 00:30
Sri Lanka is full of great business opportunities and is the jewel of the crown, asserts Head of Nestlé in South Asia and Chairman of Nestlé Lanka Etienne Benet, who was in the country this week for Nestlé Lanka’s Annual General Meeting.In an exclusive interview with the Daily FT, Benet, who is also Chairman and Managing Director of Nestlé India Ltd. and Director of Nestlé Bangladesh Ltd., noted that his first impressions were very positive. “Nestlé Lanka is a very good, credible and respected company. We have extremely good relationships with all stakeholders. We’ve just come from the shareholders’ meeting, which was a good meeting with good results.”Nestlé has been in Sri Lanka for over 100 years, having commenced local operations as a trading company in 1906. Nestlé Lanka recorded revenue of Rs. 8.6 billion with a YoY growth of 11.0% for the first quarter ending 31 March 2014 and posted a profit after tax of Rs. 1.1 billion.“I would like it to continue this growth and be a very successful company, not only for us as Nestlé but also for the shareholders, and to be seen as a very responsible company, doing good, developing people and giving opportunities to youngsters, which is more important than doubling or tripling the business. Our role in society is very important. In Sri Lanka we have a very big role and we are very proud of the way we are seen and we are also quite conscious of our responsibilities,” Benet added.Following are excerpts of the interview:By Marianne DavidQ: You have been Head of Nestlé in South Asia for the last seven months and on the Nestlé Lanka Board since January 2014. Could you outline your experiences and impressions over the last few months?A: My experience and impression of Sri Lanka as a country it that it is full of opportunities. Business opportunities are definitely great. As a country per capita consumption is actually quite high; it is around 10 times more than India in terms of per capita consumption. Excellent work has been done in the past in building strong brands.
However, like in many instances, we still have many opportunities. My first feeling and first impressions are very positive; Nestlé Lanka is a very good, credible and respected company. We have extremely good relationships with all stakeholders. We’ve just come from the shareholders’ meeting, which was a good meeting with good results.
Nestlé is very entrenched in the country. It’s not everywhere that you see a company doing so well in such a lovely environment. This is a lovely country. I would love to be Country Manager here. It is very pleasant, the people are so friendly, and the atmosphere and landscape are great.
South Asia in general is also a positive impression. We have different business dynamics and challenges in the different countries. Overall it is extremely positive. If you take the whole population into account, it is around 1.4 billion people waiting for us to do a good job.
Q: What are your plans/vision for the region, including Sri Lanka?A: First, in everything we do as a region and as companies, be it Nestlé Lanka or Nestlé Bangladesh, we have to be aligned with what the Nestlé Group wants. The Nestlé Group direction is very clearly ‘Nutrition, Health and Wellness’. The Nestlé Group has the ambition to be the recognised leader of Nutrition, Health and Wellness and of course it is expected that every region and every country participates in this. One big priority for this region is to drive the Nutrition, Health and Wellness agenda in the region.
Q: What is Sri Lanka’s role in contributing to Nestlé’s vision for the South Asian region?A: We are quite advanced in Sri Lanka. The Nutrition, Health and Wellness strategy has different angles. The first one is of course the product portfolio, the recipes and the way we improve our products in order that they have more nutritious content and they are also seen as being more nutritious to the consumers.
The second aspect is what we call science-based nutrition, which is benefitting from all the expertise and experience of the Nestlé Group in terms of research and development in relation to fundamental science in nutrition. We have enormous knowledge in terms of nutrition in the Group and what we expect is to have products that derive from this knowledge; more added value products, more nutritious products and branded active ingredients – things that can also do good from a scientific standpoint.
Of course the nutrition agenda comes also through education, so it is very important that we take our share in improving knowledge on nutrition among the population. That’s why on one side we have the Creating Shared Value (CSV) programs, where we educate consumers, stakeholders – farmers, schoolchildren, etc. – on nutrition. We take this contribution very seriously. We have recently started what we call the Nestlé Healthy Kids program, which is a non-branded program for schoolchildren on understanding good nutrition, good nutritional practices, good hygiene, etc.
Q: Of those programs, how many are operational in Sri Lanka?A: Many of the CSV programs are operational here. CSV for us is very much about working with the rural communities and of course in Sri Lanka it is very important. We are working with 23,000 farmers – 18,000 in milk collection and 5,000 farmers in coconut. We are actually the first private milk company in this country, so we collect a lot of fresh milk. We also train the farmers on good practices, improving yields, micro-financing, and so on.
We have agricultural experts working with the people who provide this technical assistance, so it’s not that we only buy the milk but we help people in improving their yield, improving the quality which is very important to us, and all the milk we collect is through this system.
Q: How has Nestlé Lanka performed financially in the last year?A: Nestlé Lanka delivered revenue of Rs. 8.6 billion with a YoY growth of 11.0% for the first quarter ending 31 March 2014. This double digit increase was largely benefitted by strong growth in the company’s exports of Maggi Coconut Milk Powder. Nestlé also posted a profit after tax of Rs. 1.1 billion.
Q: What steps will you take going forward, to accelerate the growth trajectory?A: In a company like Nestlé, you have a portfolio of products and categories and you can expect that there are different dynamics. We clearly have some categories that have some extremely strong dynamics, with very good growth and excellent development, and we have some categories that are threatened by competition or are a bit weaker, which we need to address.
The way we want to grow further and tackle more opportunities is by looking at how we can have a Nutrition, Health and Wellness agenda in every category – beverage, culinary and so on – in terms of how we improve the nutritional content and fortify the products.
Sri Lanka is a country unfortunately where you have deficiencies in micronutrients, in vitamins, in iron; we can help address some of the deficiencies by fortifying some products. We have to make products that are relevant to the consumers. In Sri Lanka I feel the consumers are more aware than in many areas of the region and also in the world in terms of the nutrition content and of the potential issues in some products. We are taking care of that by looking into what the consumers’ concerns are and how we can address them.
Providing more nutritional products, added value products and developing science-based nutrition in our products is the way to grow. As we always say, many people can do food and beverage, but not many people can do science-based nutrition products.
Q: What are the immediate challenges for Nestlé Sri Lanka and what do you see as key challenges in the medium term?A: As the Chairman of the company, I would say I am quite happy with the way this company is being run. I am very happy with the quality of the people and the products. It is a very nice company. I would not say that we have enormous challenges.
Like in all businesses, there are complications, there are some categories that are performing less well than some others, but overall I would say the company is very fine, stable, growing, and having very good relationships with the stakeholders, so I don’t think we have major challenges.
However, as in all businesses, we have to address some weak points and improve some areas where we are growing less or have more competition, or maybe need to answer better to consumer needs. We want to understand the consumer needs and address them, as a consumer-centric company.
The longer-term challenge is, with such good results and consumption per capita, how we can still sustain the growth for the future. I am very optimistic that we are taking the right route to that; we have the right product portfolio and strategies, the right organisation and the right people so I don’t see major hurdles in the future.
Q: Are there any investments in the pipeline in Sri Lanka?A: We always make investments in our companies everywhere in the world, so investments can be in terms of our brands, our assets, our people, the support we give in terms of our CSR programs. We’ll never stop. We have been in Sri Lanka for more than 100 years and in India for more than 100 years. Nestlé has a very long-term commitment to the countries, which is why it is sometimes seen as a local multinational. It is very entrenched in the countries in terms of economics, rural development and so on. We intend to continue as we have been doing; it has been working for 150 years and I would not change that.
Q: Where would you like Nestlé Sri Lanka to be in the next five to 10 years?A: Sri Lanka for me is the jewel of the crown. It’s a really nice company. I would like it to continue this growth and be a very successful company, not only for us as Nestlé but also for the shareholders, and to be seen as a very responsible company, doing good, developing people and giving opportunities to youngsters, which is more important than doubling or tripling the business.
Our role in society is very important. In Sri Lanka we have a very big role and we are very proud of the way we are seen and we are also quite conscious of our responsibilities.
Q: Your views on South Asia’s growth, trends and opportunities?A: India has enormous potential; that is obviously clear. The problem in India is that it is so vast, so diverse, so complex to a certain extent that we have to find the right strategies – national, regional or local. It’s already a pretty big business in India but definitely in terms of consumption per capita it’s much lower than here, for example. The growth opportunities are enormous, competition is extremely intense; we are of course not the only ones to do business in India. It has very high potential with a lot of competition and challenges.
We have a nice operation in Bangladesh and it’s a question of being consistent in what we are doing and giving time and patience. Certainly low consumption per capita in comparison to Sri Lanka. In those two countries we can definitely get inspiration from what we are doing here. I will go soon to Bhutan and Nepal, where I have not been yet. I assume we have good potential there. I always see potential everywhere we are.
Coming from the African region, where we were handling 22 countries – 22 countries as diverse as Nepal is from India and Sri Lanka from Bangladesh – it’s a question of finding the right opportunities. There always are opportunities, this is for certain. Formulating the right strategies, the right plan for local consumers is what is important; it’s about always being very close to the local consumer.
Pix by Daminda Harsha Perera