FMCGs Without Borders

What is the importance of Panama for Nestlé?

Nestlé has been present in Panama for over 75 years, and the country is also the nexus to our Central American operations, where we have the multinational headquarter organization. The team in Panama provides strategy, services, and back office support for all six countries in Central America, and also for Malher, the company we acquired four years ago in Guatemala. From here we provide the strategy, innovation, legal, regulatory, and financial support so that our countries can focus more on local execution, which mainly involves sales and distribution, team management, and relationships with clients and the authorities. Across all of our operations, we have more than 1,100 employees in Panama. We have a new distribution center, inaugurated last year in a new area that is secure and well organized, and where our sales and distribution teams are based. They cover all our commercial activities in Panama. Nestlé has two factories: one is a dairy factory where we manufacture evaporated milk, sweet condensed milk, powdered milk, cheese, and other dairy products. This facility collects ingredients from thousands of small farmers. We have worked with them for years to create shared value. This has given our company an important footprint in Panama. The other factory in Los Santos produces tomato products: ketchup, tomato sauces, and canned soups. Nestlé has developed a long-term relationship with tomato producers; our operations have a major impact on this type of agriculture in the country.

What specific products are driving your growth in the country?

Our most important and iconic products are evaporated milk and sweet condensed milk and have been produced since the company was established. They still enjoy high penetration and are present in households throughout the country. One of the sectors that is growing the most is Nestlé Professional, which is our out-of-home consumption vehicle. More people are eating out these days. We have machines that dispense espressos and cappuccinos in malls, hotels, and airports, and this business is growing rapidly. Within the Coffee Business, the most recent innovation is Nescafé Dolce Gusto. Nestlé launched it in Panama a couple of years ago, and it is being snapped up by consumers, who are buying more machines and portion coffee every day. Our pet food business is also growing quickly with the Purina brand.

How will it benefit your operations in the region?

Panama offers great logistics. The local government is continuously investing in developing and maximizing the logistic potential of the country. Their efforts open up new opportunities by creating synergies in the region and building a stronger supply chain. However, for an international company to really benefit from the manufacturing and supply chain in a broader sense, there are still some opportunities to be addressed. For example, the free trade agreements between Central America in regards to economies and borders. There have been encouraging developments between Honduras and Guatemala, where we also have operations. They are integrating their economies through shared borders, taxes, and perhaps even a common currency. These agreements are just as important as integrated supply chains. Products must be imported and exported to every country. These agreements, which we believe will be approved by the authorities, have the potential to dramatically simplify operations and reduce costs. Panama has 3.5 million people, which makes it difficult to justify an investment specific to that country alone. Central America has 43 million people, similar to Colombia or Argentina. You can really attract more investments when you treat the area as a whole.

How is Nestlé contributing to social development?

Creating shared value is one of our priorities. We do not have a department for this, as it is merely our way of doing business. We have been engaged in creating shared value for over 75 years. In the dairy segment we have more than 1,300 small and medium farmers from whom we buy and collect milk on a daily basis. We support them with financing and best practices. We also work together with them and the Ministry of Agriculture to improve their productivity and the quality of their milk. And in the case of tomato farmers, we have developed optimum quality seeds together with the Ministry of Agriculture. Ours is a technology intensive business, for example, in determining the most suitable variety of cattle for a hot climate, we work with the farmers and authorities. At the end of the day, we need the milk to make our products, we provide financing, knowledge, and best practices. We help the tomato farmers purchase the supplies they need in order to produce larger crop yields at better prices. We work together for our mutual benefit.

Could you share with us your targets and priorities for this year?

Our objectives and priorities are to add value to society as well as to our operations by creating shared value. Nutrition is a huge priority and is embedded in everything we do: products, packaging, and communication. It is also a priority to be recognized as the leader in nutrition, health, and wellness. We also want to develop the youth program. Entering the workforce in this country is hard, and we want to facilitate that. We work with universities and technical schools. We need mechanics and people for our factories, as well as for other jobs. We need people with specific skills. There are many young people that are aiming for these positions. For us it is important to determine: how can we work together with universities to provide practices in Nestlé at our factories? How can we facilitate their understanding? How can we help them prepare their CVs? These are important questions that must be addressed. We will lead a big youth program in Panama and Central America to generate opportunities for participants in Nestlé and other companies. We are planning to involve more than 4,000 young people in our operations and also prepare them so they can work at other companies.