Business Intelligence on Retailing, Franchising, and Consumerism in China

Nestle Aims To Double Sales In Greater China In 2012

Swiss food and beverage firm Nestle recently published its financial report for the third quarter of 2012, stating that during the first three quarters of 2012, the company's sales reached CHF67.6 billion, a year-on-year increase of 11%.

According to Roland Decorvet, president for Nestle Greater China, the group's sales in Greater China were CHF2.5 billion in 2011, ranking seventh among among all of Nestle's marketplaces. With its stake in China's Yinlu and Hsu Fu Chi, Nestle Greater China is expected to double its sales to reach CHF5 billion, which is about CNY32.513 billion, in 2012. Decorvet said the Greater China business has entered a period of fast acquisition.

Due to the accelerated acquisitions in China, Nestle acquired a 60% stake in Yinlu and a 60% stake in Hsu Fu Chi, which directly promoted the sales increase in Greater China. Decorvet revealed that its three joint ventures — Yinlu, Hsu Fu Chi, and Totole — contributed half of the total sales in Greater China. He also disclosed that the company plans to acquire the milk powder business of Wyeth; however, the deal is still subjected to the approval of government.

Previous media reports showed that in mid-2012, Pfizer announced plans to sell Wyeth's nutrition business to Nestle for USD11.85 billion. Based on statistics provided by ACNielsen to local media, Nestle's infant formula business has 4.1% market share in China, while Wyeth has 9.2% market share in this sector. Once the merge and acquisition is completed, Nestle will have 13.3% of the Chinese infant formula market, making it the third largest infant formula provider in China following Dumex and Mead Johnson.

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