THE PHILIPPINE UNIT of Nestle SA, the world's largest food and drink company, said on Tuesday it is investing P2 billion to build a new plant immediately south of Metro Manila to make a key ingredient in its Milo chocolate and malt drink.
The 5,400-square-meter plant, with an initial capacity of 35,000 tons, has been under construction since December 2015 in the company's Lipa factory complex in Batangas, with a completion date set for October 2017 and start of operations the following month.
The Lipa factory complex has two other plants that produce Milo and breakfast cereals.
It will be the fourth Nestle plant in the world producing "protomalt" -- a proprietary set of carbohydrates extracted from cassava and barley -- Jacques Reber chairman and chief executive officer of Nestle Philippines, told reporters in a briefing yesterday, describing the country as "a key market for Nestle."
Existing "protomalt" plants are located in Australia, Nigeria and Singapore.
With nearly $2.6-billion sales in 2015, the Philippines is Nestle's eighth-largest market in the world and the second-biggest in Asia after China.
Milo is a "significant" contributor to Nestle Philippines revenue, Mr. Reber said, without disclosing sales figures.
The Philippines is Nestle's second-biggest market after Malaysia for Milo, which is sold in powder form to be mixed with water or milk, or as a ready-made drink. Developed in Australia in the 1930s, Milo is marketed by Nestle in various countries in Asia and the Pacific and in Africa.
Nestle Philippines has invested nearly P14 billion in the country in the past five years to expand the production capacity of various brands.
Mr. Reber said the new plant will cater to the domestic market, but could be expanded for exports of protomalt.
At full production, the automated facility will require a work force of just 23 individuals. "So we will use 23 people to run the factory," he said. "[W]e really are importing the latest technology that we have in the group, a truly state-of-the-art factory. That's why we have not that many people working in the factory."
Nestle Philippines currently sources cassava, a key major raw material, from Thailand. But with the construction of the plant, the company plans to reduce its import dependence by tapping local supply. "Protomalt would need cassava. And our intention is to source locally the cassava. Today, it's not possible to do it in full, but we have started to be in contact with the farmer, to help them The idea is to improve livelihood, to boost agriculture and to uplift the cassava industry."
Source: Business World Online