The world's largest food and beverage company, Nestlé, which celebrates is 90th anniversary in South Africa this year, plans to spend around R300-million over the next three years in new South African investments.

Chairperson and MD Yves Manghardt said at a media briefing on Wednesday that the company, which first came to South Africa in 1916, would invest a further R60-million on the second phase of capacity expansion at its Harrismith facility, in the Free State. At this facility Nestle SA manufactures Instant Formula.

Over the three-year period, it has planned to invest some R140-million a year on improvements and replacements at its factories as well as R40-million per year on information technology (IT) and distribution areas.

This news was on the back of capital investments worth over a billion rands over the last three years. The company spent R340-million on new factories and capacity-related expansion projects and some R300-million on factory rationalisation, upgrade and improvement projects. Moreover, about R280-million was spent on improving distribution centres and R70-million on IT infrastructure.

Nestle SA operates 12 factories in South Africa, but it also has factories in Kenya, Zimbabwe, Madagascar and Mozambique. Under the South East African Region (Sear) it operated a total of 16 factories. About 85% of Nestle SA's products were manufactured locally. "We have a large manufacturing footprint in the region," he said.

In the Sear region, which recorded a R6-billion turnover last year, South Africa contributed to 85% of the business and Manghardt said that the company was aiming at balancing the contributions of the rest of the region with that of South Africa. He pointed out that Nestle SA did not aim to reduce growth in South Africa, but rather to grow the rest of the region at a faster pace. "We want to make the 85:15 equilibrium a 50:50 one."

Since it established it presence in South Africa, the Swiss-based group bought several companies and Manghardt said that it was open to more acquisitions. The company's most recent acquisition was in 2001 when it acquired 100% of Dairymaid ice-cream.

In terms of Nestle's strategy to be in line with South Africa's black economic empowerment, he said that ownership was not an option. "We own 100% of our companies in all countries in which we operate, unless there is a law for ownership," he said. He added that Nestle SA was also still awaiting government's final charter and guidelines.

Manghardt explained that the company had several empowerment initiatives, such as supporting emerging black farmers to improve on their farming and an ice-cream-on-wheels project.

The AgriBEE project supports black farmers to transform from emerging farmers to viable commercial farmers. It would also launch a new BEE initiative, involving outsourcing the distribution of ice-cream, in September.

Its core corporate social-investments activities were focused on water, nutrition, poverty alleviation, HIV/Aids, job creation and education. "Our main contribution is job creation," he said. In South Africa, Nestle employs 4 000 people.

(media release)