Dubai: The various conflicts in the Middle East have told on Nestle’s regional numbers.
“If I compare our peak in Syria in 2012 and in Iraq in 2013, we have lost more than $200 million [Dh734.4 million] in turnover,” said Yves Manghardt, Chairman and CEO, Nestle Middle East. “We used to grow more than double-digit annually in these markets, but suddenly it has started to reduce at a rate of approximately 20 per cent annually. So we lost the existing business and the momentum behind it.
“The war has cost us a lot in terms of business. In Syria, our multi-product factory was bombed in 2013 and we lost it. Since June 2014, the events around Daesh, in terms of security, have had a direct impact on the Iraq market. Since 2015, we have had major issues to get products into Yemen.
“We still have distributors in Yemen and Iraq, but we don’t directly handle the business in terms of sales.
“The war has been affecting the speed of progress (in the Middle East). If you look at 2016, the price of oil, decisions by different governments to (put a) hold on investments and cut subsidies are new factors adding pressure on the business. We are still growing, but at a reduced pace.”
But shouldn’t the opening of Iran help absorb some of the lower growth patterns? Nestle currently has two plants there, one for its bottled water brand and the other for infant formula and cereals.
“Nestle Waters is 100 per cent (owned by) Nestle and Nestle Iran is with minority shareholders,” said Manghardt. “Nestle Waters is purely for Iran, while we export the infant formula made in Iran to Syria and infant cereals to Syria and the Middle East.
“We have a growing business in the Iran market ... so there is a possibility of increasing capacity. There is also a possibility of addition to products which will naturally evolve.
“We have categories which were banned for import for the past few years. With the progressive lifting of sanctions, it will be easier to do business in Iran. But it’s a long journey.”
