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Why Nestlé won’t downscale investments in Nigeria – Alarcon, MD

Mr. Mauricio Alarcon is the Managing Director/Chief Executive Officer of Nestle Nigeria Plc. He joined Nestle Mexico in 1999. In 2010, he joined Nestle Egypt as Business Executive Manager, Ice Cream. He was appointed Managing Director of Nestle Cote d’Ivoire from 2014 to September 2016 before his current appointment as the Managing Director of Nestle Nigeria. In this interview with FINANCIAL VANGUARD, he spoke about his passion for Nigeria, Nestle operations in the country, issues affecting the business environment, etc.

By AdekunleAdekoya, Deputy Editor &

Alarcon, MD Nestle Nigeria Plc

Franklin Alli

YOU came into Nigeria at a time when things    are not exactly what it used to be. What has been your experience?

I know Nigeria is going through difficult times. Nevertheless, at Nestle Nigeria, we still manage our profitability. We are a company that has confidence in Nigeria. We have been here for the past 56 years and for us, what we see is not challenges but opportunities and we would continue to harness such opportunities.  Nigeria has an amazing population and very smart people that we are willing to work with and make a difference.  You have a lot of opportunity of diversification into agriculture and services, and so, we like to see all of those opportunities and how we can tap into those opportunities.

Operating environment

So, despite the challenging operating environment, we haven’t reduced our investment, we haven’t reduced our way of doing our business and we continuedto be very proud of our presence in Nigeria.

 

Your background showed that you managed the Atlantic cluster which comprises several countries. How would you compare your experience there to that of Nigeria?

Yes, you are right; I have been in Mexico, Australia, Switzerland, and Egypt; and as you rightly said I was in charge of the Atlantic clusters comprising Mauritania, on to Cote d’Ivoire and now, I am in Nigeria.  What I see in Nestle Nigeria is the amazing potential of the staff of the company. Nestle is one of the largest fast moving consuming goods (FCMG) in Nigeria and we are today one of the highly capitalized companies on the Nigerian Stock Exchange. So, to be honest with you, I am privileged to lead this company because my experience here is one of the most inspiring experiences I ever had in countries of Nestle operations. It is my passion for Nigeria, and that is one of the most interesting reasons why I am here. I had opportunity to visit here prior Nigeria was offered to me and at one of the staff meetings, I saw the passion and the emotion, and positive-looking ambience of Nigerians and that is what makes this country unique. 

One of your major raw materials is cocoa, and having worked in Cote d’Ivoire, the largest exporter of cocoa; incidentally, Nigeria used to be in the lead but they took that from us.  What is Nestle doing toward the rebound of cocoa sector in Nigeria?

I am very glad you ask this question but the focus should not only be on cocoa, but what role is Nestle playing in the development of the whole agricultural value chain in Nigeria? You know you can’t talk about food without talking about agriculture. Our role in agriculture goes beyond cocoa. We use locally sourced maize, soya, sorghum and cassava for our products. We have been working for a very long time to develop agriculture in Nigeria. For the past five years we have developed specific programmes for the development of agriculture in Nigeria and in agric business itself. For example, we have 41, 800 farmers that supply raw materials to us from maize to millet, soya to sorghum and cassava.  We work with them and train them on good agriculture practices and as well build their capacity to know how to manage the business. For example, if a farmer has three to five hectares, how do you help him  manage it, how do you help make the right income; so we connect them to such institutions like the International Institute for tropical Agriculture, IITA, Ibadan, International Fertilizer Development Corporation, IFDC, etc., to help them develop high yield crops and get value for their money. Our breakfast product, Golden Morn, is 100 per cent sourced from maize in Nigeria, and more importantly, we are also working on how to develop cassava for our Maggi product. So, you can see, it shouldn’t be only about cocoa but how we can play a role in agricultural management and the best way is to work together with the government and with our development partners to achieve the desired inputs. That is the biggest challenge, how we would all work on the supply chains, agric supply chains, transporting the grains and keeping them in the right order and transform them into raw materials that can be used by industries.  That is the role Nestle Nigeria is playing; we have done it in the past and we will continue to do it. 

Apart from your backward integration projects, what are the other areas you have been impacting on the economy?

We are committed to this country as we have been here for the past 56 years.  So, as we talked about agriculture, we would like to talk of it from the angle of value-chains. So, let me go step by step from the grain to the silos all the way down to the end users. So, allow me to tell the whole story while you look at it. First, we work very hard to make sure that our products are made for Nigerians from the things in Nigerian. So, for example, we have product like Maggi that has soya in it and it is sourced locally. Likewise we have Golden Morn; Golden Morn only exists in Nigeria and was created by Nigerians. At the same time, when we come out with such products, we also tackle the nutrition deficiencies; for example, Maggi is fortified with vitamins and irons to satisfy consumers.  We have three factories in Nigeria and Agbara factory is one of the largest in Africa; so, we also make impacts by being able to develop factories; at the  same time, we have training centres where  students come for manpower development, and after the training, we don’t insist that those students we have transferred skills to should remain with us;  we take about 20 students every year for an 18 months course and at the end of the course they will get their City & Guild certificates; they are trained by our best technical experts  and  at the end of the training in Nigeria, they are sent to Switzerland  to have three  months training.  They don’t necessarily have to work with us. That is an example; we train skills and we will continue to train skills.

In our company, there are people who might want to go to other companies.  Then we go to manufacturing; we have the supply chain and within manufacturing, we have our customers, distributors that have been with us for decades. We also have young entrepreneurs who are also coming up with businesses. Now we are looking for opportunities to set up cafes in universities fully run by students for them to get skills. On the Maggi side, we are also working to train young chefs through Young Chefs’ Competition so that we can develop them.  We also have another programme for our consumers; for example, kids; we have ‘Nestle Healthy Kids’ that train kids about health and nutrition habit.  We have another programmme like the Milo Basket Ball Competitions; it has been ongoing for 19 years; 19 years of continuous grassroots support of sports in Nigeria. So, Nestle participates from conception all the way down to the consumers on a lot of different platforms.  In the rural communities and in factories, we give free water boreholes, the same quality you drink here; we make people living around the factories to get access to the water.  So, we try to make an impact on every process that we participate as much as we can.  That is what we called Creating Share Values, CSV. It is something that is important to shareholders, communities, consumers and governments.   That is how we work. 

Let’s take you back on your flagship product, Maggi.  We are aware that you want to reduce the weight of the wrapper and also the salt level. How is the market in Nigeria reacting to it?

One of the great things that we have is that we are having amazing relationships with our distributors; they have been part of our business for a very long time and they trust us; they have a high level of confidence and understanding on why we need to do that, because it is not about the present but the future of the product.

Fundamental impacts

So, they have confidence and they know that we are doing the right thing and sure we have their supports and we will continue to have their supports. 

A glance at your financials last year showed that devaluation of Naira impacted seriously on your performance and knowing you as a tested man, is there any initiative you have put in place so that you can return better values to shareholders in the coming years?

Thanks for your questions. If you look at last year’s results, there were two fundamental impacts. One was tax side, and the second is revaluation. But the good thing is that we will continue to deliver values to our shareholders.  Our share value is also showing a return to profitability. The reality is that we were able to deliver dividend to our shareholders. Our first quarter of 2017 results is also encouraging and we will see how it goes. 

How is your relationship with regulatory agencies such as NAFDAC, SON, CPC and the rest of them with regards to products formulation, packaging and certification? What has been your experience?

Regulatory compliance is at the heart of our business and believe me; we adhere strictly to quality standards because it is the essence of our operations.  So, we have great relationships with all the agencies. Internally, we also set up a number of self-regulations to ensure what comes out of our factory meets global standards. It’s part of our ways of doing business. In terms of quality, we believe the standards should be very high.

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