Nestlé landed in Cuba with a $55 million factory

6 years ago - Published in Finance, Fundamental Analysis

Nestlé is investing 54 million Swiss francs ($55 million) to construct a new factory in Cuba, which will employ 260 people by its third year, it said Wednesday.

The Swiss company said that the site will produce its coffee brand Nescafe, Cuban coffee Serrano, Nestle Fitness cereal snacks, powdered beverage Nesquick and Maggi-brand cooking aids.

The plant is a joint venture between Nestlé and Cuban food enterprise Corporación Alimentaria, S.A. (Coralsa). Yearly production capacity is expected to be over 18 500 tons in total, for local consumption and export. Operations will start in January 2020, according to Nestlé.

Nescor is Cuba’s third joint venture with Nestle and reflects President Raul Castro’s drive to attract international capital to help update the Soviet-style command economy and stimulate growth.

Laurent Freixe, Nestlé CEO for the Americas, made a three-day visit to Cuba to mark the start of construction. “This new factory will help meet growing consumer demand and further strengthen our presence in Cuba,” he said. “Local production capacity combined with Nestlé’s know-how will benefit the local food industry and create new chances for growth.”

Nestle last year already exported Cuban coffee as a limited “Cafecito de Cuba” edition of Nespresso single-use brewer pods, including to the United States. “It sold at an impressive speed,” said Freixe. “Within a few days that line was sold out, which shows the potential.”

Before being able to export Cuban coffee, Nestlé would first need to help Cuba increase its harvest, Freixe said, which has steadily declined since the 1959 revolution.

The inauguration ceremony was attended by Cuban food minister María Carmen de la Concepción González as well as president of Coralsa, Nelson Arias Moreno.

Nestlé Cuba country manager Harold Hoffman said: “This production plant represents a great opportunity to develop new categories with high demand in Cuban market. We seek to offer products with nutritional value, in coherence with our nutrition, health and wellness strategy, while expanding the business in the region.”

While in Cuba, the Nestlé delegation also visited the company’s Los Portales plant, at Pinar del Río, where carbonated soft drinks and bottled water are produced.