5 September 2012

Zimbabwe: Nestle Spends U.S.$12 Million on Plant Upgrade

NESTLE Zimbabwe has spent about US$12 million on upgrading its cereal products manufacturing plant in Harare. Managing director Mr Kumbirai Katsande yesterday said after the plant upgrade the firm had more than doubled its production capacity. The plant will be commissioned next Friday.

Mr Katsande said most of the funding invested over the last three years had gone into raising capacity in production of infant cereals.

"We have more than doubled production capacity for our popular cereal brands," he said. "You remember that even during economic difficulties Nestle remained open.

"After the coming of dollarisation we have been able to build on that, but were not able to cope with demand. The fact that we have more than doubled gives us capacity to export as well."

Nestle used to export to regional countries, including Zambia, Malawi, Mozambique and the Democratic Republic of Congo.

As production increases, said Mr Katsande, the company would construct more facilities. It has started building up new administration and laboratory blocks.

The Switzerland-headquartered firm continues to demonstrate growing confidence in the economy at a time other investors are sceptical of indigenisation and empowerment.

In light of its expansion plans, Nestle realised the need to enhance milk production through rebuilding of the national dairy herd. Mr Katsande last year said Nestle was generating only about 15 percent of volumes required for its wide range of milk-based products.

Last year, Nestle said it would import over 2 000 dairy heifers from South Africa. The heifers have so far been distributed to contracted and smallholder farmers across the country. The dairy herd rebuilding programme is part of the company's US$14 million dairy revival project. This would raise its milk intake from the current 3,5 million litres a year to about 28 million litres over a seven-year investment period.

The project started in Mashonaland East Province. Midlands, Matabeleland North and Manicaland provinces followed, before the firm spread the project to the rest of the country.The predominantly Jersey, Friesland and Jersey-Friesland cross breed heifers are being imported from the Eastern Cape, South Africa.

Under the dairy revival project, Nestle pledged technical and financial help to contract farmers, who supply most of the firm's raw milk. The dairy revival project follows an ongoing US$27 million capital expenditure, demonstrating Nestle's commitment to Zimbabwe.

It produces such top brands as Cerevita, Cerelac, Everyday Milk, Nesquik, Ricoffy, Milo, Nescafe, Nido, Maggi powder soups and the new Nestle Mom for pregnant and lactating mothers.

The multimillion-dollar dairy revival programme will establish milk production and collection centres in all the provinces.

Zimbabwe previously had a national milk production capacity of 260 million litres a year, but this had declined to 50 million litres. The dairy herd has declined from 200 000 (in the 1990s) to 40 000.

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