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August 20, 2009

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Nestle forecasts 20% sales growth

NESTLE SA, the world's largest food company, expects sales in China to grow close to 20 percent annually over the next few years with a limited impact from the global financial crisis, Patrice Bula, chairman and chief executive officer of Nestle (China) Ltd, said yesterday in Shanghai.

"The global financial crisis is not a major problem for a big food company like us because we sell products in many price ranges," Bula said.

The Vevey, Switzerland-based maker of Nescafe, Kit Kat chocolate bars and Maggi soup, trimmed its 2009 global outlook after its 3.5 percent sales growth in the first half was below market consensus.

Bula said sales in China posted double-digit growth during the same period, making the country one of its most important markets.

Nestle yesterday opened a new production line for Nescafe coffee in Shanghai to tap growing market demand. The 60 million yuan (US$8.78 million) facility will be able to make 7,000 tons of instant coffee every year.

Nestle became a household brand in China in the 1980s when Nescafe became the first foreign brand coffee on the Chinese market.

But the Swiss company is also facing growing market competition from major international coffee chains like Starbucks and Coffee Bean and Tea Leaf, which promote fresh coffee and aggressively open new stores.

"There is still big room for coffee consumption in China to expand and we need them to jointly develop the market," Bula told Shanghai Daily. "Besides, we offer coffee products at different prices."

Nestle posted sales of 14 billion yuan in China last year and the coffee and beverage division contributed nearly 50 percent of that figure, according to Adrian Ho, head of the division in China.


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