Nestlé to Make $5.7 Million Moroccan Dairy Investment

on May 28, 2012

Nestlé has announced plans to invest $5.7 million in the North African country of Morocco in the next three years, reported a recent article in the Financial Times. The Swiss food company has been showing serious commitment to expanding its business lines. The Financial Times reminded that last month Nestlé shelled out $11.85 billion to acquire the infant nutrition business unit from Pfizer – what was dubbed the largest ever acquisition by the European company as it strives to expand its global presence in the baby food market.

Nestlé now aims to expand its milk collection and production division. The Financial Times said that the company is not foreign to investments in the food sector in Morocco. In fact, since 1992 Nestlé has been operating a factory for powdered milk in El Jadida, a port city on the Atlantic coast of Morocco. Nestlé today sources an estimated 73 million litres of fresh milk from over 16,000 dairy farmers in the country.

With its new venture in the Doukkala-Abda region, Nestlé hopes to encourage more private investors to channel capital to the diary industry in the area. About 22 percent of the milk produced in Morocco today is centered in Doukkala-Abda, which sources over 340 million litres a year.
According to a press release on the Nestlé website, “The collaboration with the local authorities in the Moroccan region of Doukkala-Abda aims to increase milk production, improve the quality of fresh milk and encourage the development of the dairy industry throughout the private sector.”

In addition, the new venture will provide training and expertise to more than 10,000 farmers, educating them in areas such as technical equipment, milk supply, finance and management.
David Saudan, Chief Executive Officer of Nestlé Morocco, asserted: “Our investment aims to encourage the growth of the dairy sector and help us to continue to deepen our engagement with farmers and their communities.”

The company’s press release further explained that collaborating with local farmers is an integral part of Nestlé’s new business approach called Creating Shared Value, or CSV. Launched back in 2006, the CSV business strategy has laid its foundation on three key pillars – investments in rural development, nutrition and water. Investment initiatives under the CSV program include a gender empowerment and ecological housing program in the Philippines, sustainable pistachio production in Turkey, energy production from coffee grounds in Colombia and a water quality project in Argentina. By investing in the development of the agricultural sector in Morocco, Nestlé’s goal is to create value for its shareholders while at the same time providing economic benefits for the communities it serves and in which it operates.

The Financial Times cited Moroccan officials who noted that the Moroccan economy is heavily dependent on investments from Europe. Capital from investors abroad was growing steadily until the global economy was hit by financial woes in 2008. As a result, foreign investments in Morocco took a dip. The Financial Times said that for the past couple of years direct foreign investments in the country are picking up once again, reaching a total of $3.6 billion in 2010.