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Nestlé opens cereal plant in South Africa

By Oliver Nieburg , 06-Aug-2012

Food giant Nestlé has opened two new plants in South Africa, one of which will produce Milo and Cheerios breakfast cereals.

Nestlé new 16,000 square metre factory in Babelegi in Gauteng province will produce Milo and Cheerio cereals locally. These products were previously being imported.

The company will take on 70 new employees at the plant.

The company has also opened another factory in Babelegi, which will produce Maggi products such as bouillons, seasonings and noodles. It will employ an additional 160 people to man the plant.

Nestle has invested a combined ZAR 390 million in the two facilities, which are located next to its coffee creamer factory also in Babelegi.

The company is investing a further 47 million South African Rand (about CHF 5 million) to expand the coffee factory, an will also spend 37 million Rand (more than CHF 4 million) to construct a  new distribution centre nearby.

Cheerios and Milo cereals will be produced locally for the first time instead of being imported

Consumer demand

The firm said the investments were in response to rising consumer demand.

Nestlé CEO Paul Bulcke said at the opening ceremony of the new plants: “We see major potential for our business in South Africa,”

“It has a population of almost 50 million and a growing middle-class with increasing purchasing power.

“This is why we continue to invest heavily to accelerate our growth here. It is a clear illustration of our commitment to this region.”

South African cereal market

Nestlé has opened 12 production sites and four distribution centres in South Africa since it built its  first factory on the African continent in South Africa in 1927.

The company employs 3,700 staff in the country.

The South African breakfast cereals market is worth €317.7m, according to figures from Euromonitor International.

Nestlé command a relatively small share (4%) of the South African breakfast cereal market, but could put pressure on market leaders Bokomo Foods and Kellogg by stepping up production of popular Cheerios and Milo cereals.

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