Nestlé looking to double liquid beverage capacity through new KL plant

08-Jul-2013 - Last updated on 09-Jul-2013 at 05:29 GMT

Nestlé Malaysia has broken ground on a new plant on the outskirts of Kuala Lumpur that it expects will double its local ready-to-drink production capacity by the time it opens in May next year.

The RM150m (US$46.8m) facility will be built next to its existing plant in Shah Alam and produce beverages including Milo, Nescafé, Omega, Low Fat Milk and Full Cream.

With close to 300m servings of Milo and Nescafé already consumed each year in Malaysia, doubling Shah Alam’s capacity will allow Nestlé to introduce new products and also grow its export market.

RTD growth

"Over the last four years, we have seen significant growth in Nestlé’s ready-to-drink beverages,” said Alois Hofbauer, the company’s regional head, at a groundbreaking ceremony. “This is mainly due to changes in consumer lifestyles, as people increasingly prefer on-the-go cold beverages.

"The strong surge in demand has encouraged us to invest and expand our manufacturing operations here in Malaysia," he said, adding that he had allocated RM250m (US$78m) for capital expenditure this year.

Last month, the company revealed in an interview that it expects to see its ready-to-drink category gain 20% year-on-year growth in sales over the next five to 10 years in Malaysia, doubling average industry projections.

"This ready-to-drink category is important because it is riding on the growth of the consumer trend moving towards convenient products in the ready-to-drink format," Teo Heng Keat, business manager for Nestlé’s liquid drinks, told Malaysia’s The Sun newspaper.

Market potential

"The consumption per capita for this category is still low. On average, a Malaysian drinks about 20 servings of Milo and Nescafé a year, which translates to about a can or a pack per month. Thus, there is huge potential for us to grow this business."

Teo said that Milo and Nescaféhave together enjoyed more than 20% growth in sales over the last three to four years, with Nescafé having a market share of 70% and Milo 50% in the ready-to-drink category.

Once it opens, the 172,200sq-ft plant will employ 160 workers and indirectly generate further job within its supply chain.

“Wherever Nestlé operates in the world, we invest for the long-term,” said José Lopez, Nestlé’s head of operations.

“We have been present in Malaysia for more than 100 years and we have confidence in the strength of the Malaysian market.”