KUALA LUMPUR: Nestle (Malaysia) Bhd is emerging as a strong and formidable food giant after 104 years in Malaysia and a substantial investment of about RM1.1 billion over the last five years.
After forging a strong presence in Malaysia since 1912 and embarking on an aggressive new product innovations several years ago, the company, the Malaysian unit of Switzerland-based Nestle SA, is now ready to roar and further engage the hearts and minds of Malaysians.
Its managing director, Alois Hofbauer, said Nestle Malaysia has invested substantially in manufacturing capabilities over the last five years and would continue to invest in product categories and new launches next year.
“Malaysia was also selected to be one of Nestlé’s global procurement hubs to meet the needs of this region, together with hubs in Switzerland and Panama,” he told Bernama.
The hub, Hofbauer said, is slated to be officially launched in early 2017 in Selangor.
It will provide a range of services, including the management of procurement for specific raw materials, packaging, indirect materials and other services, he said.
“The hub will also support markets with managing local expenditure and would create high-income jobs in Malaysia,” he said.
Hofbauer said Malaysia is an attractive investment destination based on long-term fundamentals, good strategic location and abundant resources.
“After 104 years in Malaysia, we are gaining the trust of the people and consumers millions of times every day and delivering quality products such as Milo with more than six million cups served every day in Malaysia,” he said.
Hofbauer said the other best selling product in Malaysia, Maggi Chili Sauce, is also a huge sensation as the chilies are of the highest quality and handpicked from Kelantan farmers.
“We will continue to concentrate on our existing collaborations with chilli farmers from Kelantan.
“Our products are not always the cheapest, but in terms of quality, health and nutrition, they are the best in the market,” he said.
According to Hofbauer, Nestle Malaysia employs over 5,000 people and produces more than 500 halal products with Made-in-Malaysia leading brands such as MILO, MAGGI and NESCAFÉ.
“We have eight manufacturing facilities in Malaysia located in Selangor, Negeri Sembilan, Sarawak and Perak,” he said.
All Nestle Malaysia’s manufacturing facilities, he said, are halal-certified, supplying the domestic market as well as exporting high quality Made-in-Malaysia halal products to over 50 countries worldwide.
Hofbauer said Nestle Malaysia has also made great effort to improve the nutrition value of its products with the sugar content in the Milo drink cut by 20 per cent last year and the salt content of its Maggi curry reduced by as much as 30 per cent.
He said the new innovative products, such as the Maggi Oatmee, which has the lowest salt content of any instant noodle, was also introduced to meet global health concerns in line with the food giant pledge to meet standards set by the World Health Organisation.
Product innovation by continuously delivering quality products with superior taste, Hofbauer said, will continue to fuel growth especially in a volatile market environment as volatility in oil prices and commodities will persist.
“A lot of products that are in the market do not exist two or three years ago.
“We are continuously striving on innovation, developing and evolving with consumers needs,” he said.
He said the secret to Nestle Malaysia’s success in sustaining its earnings over the years is innovation in bringing new products and offerings as well as renovating products that have been existence for many years in line with consumer needs.
“In 2013, our financials were good but we see challenges ahead which led us to establish ‘Fuel the Growth’ strategy that focuses on fuelling growth in efficiency, productivity, innovation and transformation,” he said.
The three pillars of Nestle Malaysia’s strategy based on FIT (or Fuel, Innovate and Transform), Hofbauer said, have helped the company through the challenging economic situation when consumers are much more prudent and disposable income of consumers are under pressure.
Nestle Malaysia, propelled by its innovation drive, he said, has reached a number of milestones this year, among them, the launch of new and exciting products and the opening of the KitKat chocolate concept store that enables customers to personalise and custom-made their own chocolate flavours.
“The best source of innovation is our own people as we encourage them to come out with great ideas of new products that can be commercialised successfully.
“Innovation is part of Nestle’s DNA (deoxyribonucleic acid) and will continue to be a key driver for business growth.
Innovation and renovation of products contributed to 10 per cent of our annual sales in 2015, almost tripled that in 2013,” he said.
Hofbauer revealed that today Nestle Malaysia is not just innovating products, but is also innovating business model to provide cost-effective business solutions and deliver affordable products in the market.
“As part of our long-term strategy from the start, we knew that we need to look at making our internal systems more efficient to deliver the savings needed,” he said.
Hofbauer said Nestle Malaysia has been able to harvest big savings through the group’s productivity-improvement platform which focuses on eliminating wastes and delivers continuous investment in productivity gains as well as incremental improvements.
“This has enabled us to harvest big savings of RM129 million in 2013, RM134 million in 2014 and RM188 million in 2015, which were reinvested into the brands,” he said.
By reinvesting the savings, he said, Nestle could give more value to the consumers.
Hofbauer said suggestions from people from the operation line has also helped Nestle Malaysia reap huge savings in cost of operations.
After delivering a set of respectable financial results for the nine months ended 2016, Hofbauer said, Nestle Malaysia is cautiously optimistic of its earnings outlook next year.
For the nine months ended September 30, 2016, pre-tax profit increased to RM685.02 million from RM609.03 million in the same period last year.
Hofbauer, an Austrian, is optimistic on the future outlook of Malaysia with its strategic location in Asia and being an important halal hub for the Nestle group globally.
“Back in Europe, ‘Yesterday Once More’ is the favourite song, but here in Asia and Malaysia, people believe that tomorrow is going to be a better day and are expanding positively into the future,” he enthused with a steely demeanour.
Hofbauer, who joined Nestle group of companies in 1990, has held many senior positions in Hong Kong, China, Taiwan and Sri Lanka until his present appointment as the managing director of Nestle Malaysia in 2013. — Bernama