IT’S ALL HERE

Kazakhstan 2015 | AGRICULTURE & FOOD | B2B: FOREIGN FOOD COMPANIES

Major international food companies are cheerful about their prospects in Kazakhstan, where consumers are only starting to latch onto their products.

Mark Pothast
MARK POTHAST
Country Manager
Eurasia, Nestlé
David Manzini
DAVID MANZINI
General Manager
Mars Central Eurasia & Belarus

What distinguishes the fast moving consumer goods market in Kazakhstan?

MARK POTHAS The market certainly presents challenges that we don't see elsewhere. The primary difficulty is distance, and there are 15 million people residing in the ninth largest country in the world. And another challenge is an inadequate supply of talent, whereby despite the presence of bright young people, many are highly inexperienced. Meanwhile, compliance is also an issue. We need to make sure that business is conducted appropriately, and it is actually a question of perspective. I would stress that Nestlé is not an “international" company, as such, but rather, one that works throughout the world. Ultimately, we are invited guests here, and therefore work hard on compliance and making sure the business community and general public is well aware of our values.

DAVID MANZINI Kazakhstan is what we call the Full Force Growth Market—for us it is a top priority market, like Russia and China. We have a very ambitious plan in place for the next three to five years. Our ambition is to double the size of our business. We have a road map and we are still on track for 2014, in terms of gross delivery and expansion. In 2015 we are planning to increase headcount by 30%. The level of chocolate consumption is far below the regional average. People are consuming around three kilograms of chocolate per year, whereas in Russia, we are at five and a half to six kilograms per year, so there is a big opportunity to boost chocolate consumption here. The pet-care segment is similar to the chocolate one: the calorie-coverage per pet is very low in Kazakhstan and one of the missions of Mars is to bring products to a local consumer so they can take care for their pets. The proportion is even more important in pet care in terms of gross opportunity, we think that we can double or triple the size of our business to go above $100 million in three years time in this specific segment.

How do you plan to consolidate your positions in the market, and ensure that you are on supermarket shelves in the country?

MP Nestlé works hard to create shared value in this market. Of all the product categories, the major challenge is coffee. The local population consumes just 40 cups per year, in stark contrast to around 300 cups per person in Russia. Instead, the average person in Kazakhstan consumes 1,500 cups of tea per year and the challenge is to convert them into more active coffee drinkers. Chocolate consumption, at 3 kilos per person per year, is also limited. Moreover, the format in which chocolate is consumed is a critical factor. Here it is mostly consumed in bulk, a segment in which Nestlé does not really compete.

DM The strategy of Mars is not to overload people with products; rather it is to increase market penetration. We are mainly selling our product as single bars, to raise the per-capita consumption of the country. We prefer to have one hundred consumers buying one time than 50 consumers buying two times the quantity; this is our philosophy. Some manufacturers here in the chocolate market are focused on one channel. However, we prefer to be everywhere. In terms of coverage and penetration of stores we want to go as far as we can. So far we do not have any plans to build a factory in Kazakhstan. Here in Kazakhstan, there are several non-wrapped or homemade products, which might be good products, but from a hygienic point of view, they might not be. Mars ensures that its products are high quality, and prepared to the highest standards of biotechnology. An important factor for us is the state of the Kazakh stani economy, which is characterized by solid GDP growth of 5.7% last year, despite the devaluation, and by political stability.