Nestlé To Invest $1 Billion In Mexico By 2019

By Sam Lewis

Food-manufacturing giant will be pouring big bucks into two new factories in Mexico, emphasizing efforts to strengthen its place in emerging markets

On Friday, Jan 24 Nestlé announced plans to build two new factories in Mexico. The first factory will be located in the city of Ocotlán in western Mexico’s Jalisco state. This facility will produce infant nutrition products. The company is also planning to build a pet-food producing facility in the city of Silao, in the Mexican central state Guanajuato. Additionally, the company is planning to expand its breakfast cereal factory in Lagos de Moreno, also in Guanajuato, as part of its growth effort. According to Nestlé, the effort will create 700 direct and 3,500 indirect jobs.

These growth investments come as food manufacturers are faced with governments around the world implementing or considering implementing taxes on highly-caloric foods and snacks in an effort to reduce obesity. Hungary has been taxing food with high levels of both sugar and salt since 2011. Back in 2012, Costa Rica, Peru, and Uruguay placed a ban on “junk food’ within public schools. Most recently, in October of last year, Mexico proposed implementing a tax on packaged foods with high calorie contents, a move linked exclusively to the country’s battle with obesity. The bill passed by Mexico’s lower house of Congress hopes to place a 5 percent tax on highly caloric packaged foods. As of January 1, Mexico has imposed a 16 percent sales tax on processed pet foods as part of President Enrique Peña Nieto's plan designed to boost revenue.

Sales in emerging markets have maintained Nestlé’s place as a leading food manufacturer. The company’s sales in Europe and many other developed markets have slowed during lackluster economic conditions. Nestlé hopes to further its place in Mexico, its sixth-largest and fastest-growing market, with its expansions. According to Nestlé’s CEO Paul Bulcke, the decision reflects the company’s “long-term vision in a market with high growth potential.” The company reported $3.64 billion in sales in Mexico during 2012 which accompanied revenue gains of nearly 10 percent against 2011’s financial results. Fiscal 2013 results from Nestlé are expected in mid-February.

Want to publish your opinion?
Contact us to become part of our Editorial Community.