Nestle backs beverage ‘belief’ in Vietnam with $36m Milo investment


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Nestle backs beverage ‘belief’ in Vietnam with $36m Milo investment

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Nestle has spent $36.6m expanding its Milo chocolate malt beverage factory in Vietnam and stressed its ‘firm belief in the potential of the country’ as nutritional drinks demand grows.

Nestlé has spent the CHF 35m to double production capacity at the Binh An site in the Southeast of the country, as the company meets growing demand for Milo and other ready to drink (RTD) beverages that it plans to launch in future.

Nestlé corporate spokeswoman Samantha Mendis told"Work for the current Milo​ RTD plant is complete, and will double our production capacity for the product to up to 100,000 tonnes/year. Further expansion will depend on our business requirements." 

Although Nestlé produces both Milo RTD and Milo Powder in Vietnam at the current time the new plant in Binh An will produce only Milo RTDs for now in 110ml, 115ml and 180ml-sized packs.

"We would like to refrain from commenting on new product innovations at this point to protect competitor sensitive information,"​ she added, when asked about information on future RTD beverage launches.

Wayne England, chairman and CEO of Nestlé Indochina, said the investment reflected Nestle’s confidence regarding opportunities in Vietnam “due to its young and dynamic population, expanding consumer market, and favorable business environment”.

Long-term Vietnamese vision

“We have a long-term vision and a firm belief in the potential of the country,”​ England added.

Nestlé's liquid beverage focus in Vietnam stems from its 2011 acquisition of Gannon’s milk and beverage processing facility in Dong Nai.

The company developed Milo in Australia during the 1930s depression, as a direct response to the fact that children were not receiving enough nutrients from their daily diet.

As a beverage designed to add to the nutritional value of milk, Milo is fortified with calcium and magnesium (for strong bones) iron (to aid oxygen transport around the body), vitamins B1 and B2 to help the body unlock and use energy, vitamin C (bone health) and vitamin A for healthy eyesight.

Mendis told us that the product is designed to caters for children aged 7-12 years, with primary communication targeted at mothers, while engagement with children is limited to sports activities.  

She said that key markets for Milo are in South East Asia and Africa: e.g., Malaysia, Singapore, Philippines, Central and West Africa, Indonesia and Indochina.

"Growth is broad based and comes from the markets mentioned earlier as well as Chile, Colombia and Peru,"​ Mendis said.

Nestle maps ‘nutritional gaps’ in Vietnam

Last October Nestlé said it was helping address macro-nutrient deficiencies in the developing world by ‘mapping’ nutritional gaps – collecting information from local governments and international health authorities about specific dietary gaps in the developing world.

The company said this process helped identify where was a need for micro-nutrients including iodine, zinc and vitamin A, allowing it to develop products to meet consumer needs.

The United Nations (UN) estimates that two billion people worldwide suffer from micro-nutrient deficiencies, a situation it calls ‘hidden hunger’.

“Often, it is young children and women of child-bearing age who could most benefit from fortified foods,”​ the company said, noting that it had collated data from Central American countries, the Middle East, Africa but also Southeast Asian nations including Vietnam.

"Milo is fortified with calcium, vitamins and minerals,"​ Mendis said. "Further, Nestlé Vietnam’s work with the country’s National Institute of Nutrition (which comes under the national Ministry of Health) has helped it fortify Milo with iron. Iron is a micro-nutrient deficiency in Vietnam."

Asked how much scope Nestlé believe there is in nutritional drinks generally on a global basis, and whether it is specifically tied to dairy-based products, Mendis said: "We are experiencing robust growth in this category across markets and see significant potential for further growth of nutritional beverages in the future."

As a group Nestlé runs five factories in Vietnam and employs around 2,000 staff. 

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