Nestlé closes its factory in DR Congo

Dec 4, 2017

Nestlé Africa
Food giant Nestlé announced it’s shutting down its factory in the Democratic Republic of Congo and focusing on assuring its distribution through third parties.

Nestlé’s factory in Kinshasa, the first and only producing facility of the Swiss food giant in DRC, will shut down. The factory was first announced in 2009, although it only started operations two years later and represented a $43 million investment that, according to Nestlé Congo CEO, aimed at tapping into the 70 million consumer market potential of DRC. At the time, Nestlé’s regional head also stated that the investment followed a growth of the company’s business in the country since the opening of the first distribution centres in 2009.

The factory was mainly a finishing facility, aimed at adapting to diverse manufacturing needs like processing ingredients and packing products. Nestlé mainly produced Maggi culinary products in the Kinshasa factory, such as stock cubes and tablets. The facility also produced for coffee brand Nescafé.

Nestle congo factoryThe initial investment in an instability-plunged country like DRC, in the realms of politics business and security was a bold move by the Swiss giant, one that aimed at getting a slice of the “Africa rising” phenomenon. However, three years after starting operations, the factory in Kinshasa was relatively empty and sales numbers in the country – although growing – were still weak. In 2014, Nestlé was selling the same amount of Maggi cubes in DRC as it was in the Republic of Congo, a country with 7% its population.

Until now, the poor results of the DRC operation did not wave Nestlé’s confidence on the investment and on the growth of the market. The company was betting on a consumption growth supported by an increase in income and an expansion of the consumer class. The closing of the Kinshasa factory might perhaps be seen in the context of a different understanding of the country’s development. However, it also reflects a broader strategy by Nestlé not only in DRC but also in other countries in Africa. Recently, the company announced a refocusing on the lower end of the consumer class in Africa.

A company representative has clarified that the Kinshasa factory will shut permanently in January 2018 and that Nestlé in Congo will “continue to develop an economic distribution model through third parties.”

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