Nestlé puts up

Nestlé Philippines is building a R2-billion protomalt plant within its Lipa facility in Batangas, its fourth in the world. Protomalt, extracted from barley and cassava, is the main ingredient for one of the Nestlé Group’s biggest beverage seller in the country, MILO and all its choco-malt variants.

Nestlé Philippines chairman and CEO Jacques Reber said the MILO malt plant which started construction last December will be operational in October next year. Production capacity initially is at 35,000 tons.

Reber in a media briefing yesterday said they plan to increase capacity in three to four years and depending on demand, may decide to export MILO malt in the future.

The protomalt produced locally will be consumed by the domestic market mainly but would ship it to other markets when there are export opportunities going forward.

“The 35,000 ton capacity will satisfy our needs (in the Philippines) and later we will look at global (requirements). We don’t have concrete plan yet when we will add the extra capacity,” said Reber. The plant can double capacity in two years if needed.

The Philippines is Nestlé Group’s second largest market for MILO after Malaysia and Nigeria. It currently sources its MILO malt from its Singapore plant.

Overall Nestlé market, the Philippines is also second biggest after China, and the eighth in the world. Last year, the local company reported sales of R121 billion, up from R116 billion in 2014.

“The Philippines is an important market (and the) R2-billion investment is a clear demonstration that we believe in the potential of the Filipino market, of the Philippines and Nestlé Philippines,” said Reber. “And we continue to invest in a big way.”

Reber said in terms of revenues and sales, the company is expanding faster than the country’s gross domestic product output, which grew 6.9 percent in the first quarter, the fastest growing economy in Asia during the period.

Since 2011, Nestlé Philippines has invested R14 billion and Reber said they expect this amount to significantly increase in the next five years as they increase production capacity, upgrades facilities and imports new technologies.

He said the MILO malt plant will only employ 23 people since they will be bringing in the most advance equipment to produce protomalt.

The cassava requirement will be initially imported from Thailand as Nestlé Philippines establish linkages with the local cassava farmers. However, as what they did with the coffee farmers under its Nescafé “shared value” program, they plan to develop cassava agriculture and start sourcing the product locally.

Reber said Singapore is currently the major source of protomalt. But plans are also underway to make the Lipa plant three times bigger than the Singapore plant in the future.

Nestlé Philippines operates five plants in the country – in Cabuyao Laguna (infant nutrition products, milks and liquid beverage), Cagayan de Oro in Northern Mindanao (coffee and powdered milk drink), Pulilan Bulacan (ice cream and fresh dairy), Lipa Batangas (powdered beverages and breakfast cereals) and