Nestle Malaysia CEO Exclusive Part III: Exports key for growth, but ‘we will live or die with success in Malaysia’

By Pearly Neo

- Last updated on GMT

Nestle's factories in Shah Alam. ©Nestle Malaysia
Nestle's factories in Shah Alam. ©Nestle Malaysia

Related tags Nestlé Malaysia

Nestle Malaysia CEO Juan Aranols has revealed the firm’s strong export focus is key for growth, but believes that it will ‘live or die’ by ensuring its products are competitive domestically and win the hearts of local consumers.

Nestle Malaysia manufactures products for export to over 50 countries worldwide, largely exporting via Nestle subsidiaries in other countries including Australia, New Zealand, Japan, the EU, the United States, the rest of South East Asia and many more.

The firm is largely considered to be the main manufacturing hub in the Asia Pacific region, and maintains multiple factories across the country to support this – but despite the exports business being so vast, Aranols told FoodNavigator-Asia​ that Nestle Malaysia’s priority remains to cater for local consumers in Malaysia.

“Exports make up about 20% to 25% of the business, and it is an intense and significant activity for us – and we definitely take good care of it,”​ he said.

“That said, the bulk of our operations is still our business in Malaysia, and we will live or die with our success in Malaysia – so it is ever more important to ensure that Nestle Malaysia’s products are ones made to compete and win with Malaysian families, which we will continue to do.”

Aranols also explained how the business was designed to support both large export volumes yet still benefit the firm’s local business – and it’s all based on economics.

“Our factories are designed to support exports, and this is because exports are in turn an important caveat for the factories in terms of fixed cost absorption,”​ he said.

“A thriving exports business also creates opportunities for us to invest behind generating demand in Malaysia – i.e. these help to absorb the infrastructure costs so allow us more efficiency to release resources for investing to generate local demand.

“So we see the exports business as important to generating demand locally, and this system as a good one to mutually benefit both ways.”

Popular exports

There is also a benefit to developing products in line with the tastes of Malaysian consumers, as over the years it appears that stronghold products in Malaysia such as Maggi and Milo have also found universal favour with many export markets.

“Generally, we’re seeing the demand for Maggi instant noodles is really high everywhere. The demand for noodles skyrocketed in 2020, likely due to the convenience factor and being easy to combine with proteins and vegetables,”​ said Aranols.

“Importantly for Maggi also has been the taste, the spice factor which appeals to many consumers worldwide, and this appeal really cuts across all markets whether western, eastern, developed, less developed and so on.

“Then of course there’s Milo which is found in many countries – the label may change, but the recipe is mostly the same. And let’s not forget KitKat, for which we are the manufacturing base in South East Asia.

“So generally, the Malaysian taste is pretty trendy in many parts of the world. Our products are also halal-certified, which I would say is an important element, but not enough to standalone – in the international market, products need to be interesting and competitive [to thrive].”

Nestle Malaysia also operates the Milo Manufacturing Centre of Excellence​ in Chembong, and Aranols told us of increased investment into its Batu Tiga Maggi production facility, where they are now finalizing capacity expansion even despite COVID-19 so as to increase exports.

Local strategies

Locally, Aranols believes that the key thing at this point where Malaysia is undergoing another round of COVID-19 lockdowns is to ensure availability of products on shelves, as well as to ensure an affordable​, attractive value proposition for consumers.

“We know that this pandemic has affected many people financially and want to make sure to give them value for money and ensure Malaysian families can afford our products,”​ he said.

“We’re also looking closely at exploring new territories – and by this I don’t mean just expanding existing ranges, but also looking at new areas like with our upcoming new plant-based products​.

Innovation is also the name of the game locally – in the last few months alone, Nestle Malaysia has brought out several innovations such as relaunching Nescafe Classic, expanding its Starbucks At Home range, creating new Maggi products like the Maggi Fusian Sarang Kimchi, and launched the Nestle Musang King Ice Cream with durian pulp.

“There’s also a lot in motion to prepare for Chinese New Year – apart from activities and promotions, we’ve also launched our KitKat Gold and KitKat Gold ice cream, and despite everything going on the festive season momentum still feels strong,”​ said Aranols.

“We will continue to work on keeping our brands interesting and relevant, as well as increase visibility on both digital and traditional media too.”

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