Swiss global corporate Nestle is the latest firm to bring in major form of foreign investment into the Communist-run island of Cuba as it struck a deal with the Cuban government to lay the foundation stone for coffee and biscuits factory joint venture. The venture is worth an estimated $55 million and would be located in the Mariel special development zone.
It has been some time that Cuban president Raul Castro has been striving to lure in foreign capital for the purpose of updating the Soviet-style command economy and generate growth and to that end, Nescor is an important mile stone as it marks Cuba’s third joint venture with Nestle.
International companies were offered g-high rates of tax rebates for opening shop at the special zone around Mariel port just west of Havana, which was created by the country about four years ago. There has been a recent cash crunch as aid form socialist Venezuela has reduced significantly and the later itself is in a severe financial crisis and the aim of the present Cuban government to prioritize Made in Cuba policies for replacing imports has therefore assumed greater significance.
It had been just 18 months, a “record speed” in the words of Nestle Vice President Laurent Freixe, that the Swiss company managed to complete negotiations with the Cuban partner Coralsa and Mariel authorities and the foundation stone was laid, Freixe said in an interview.
Freixe, head of Nestle’s Americas division said that coffee products would be manufactured at the new factory which would become operational from the end of 2019. Other products such as biscuits would be brought in later. bottled water and other beverages and ice cream are the products that are produced at the other two joint ventures that Nestle has in Cuba, even as the company also exports goods to the country.
Freixe said that while planned to be eventually exported, the home market of Cuba and tourists would be the primary targets for the products manufactured by Nescor.
“Cafecito de Cuba” edition of Nespresso single-use brewer pods was exported in a limited manner by Nestle last year. the United States was among the countries where it was exported.
“It sold at an impressive speed,” said Freixe. “Within a few days that line was sold out, which shows the potential.”
The harvest of Cuban coffee has been steadily decreasing since the 1959 revolution and Nestle wants to help the Cuban government to enhance the production of coffee before it can export Cuban coffee, said Freixe.
The $135 million turnover of Nestle in Cuba, could be doubled in the medium term by the establishment of the new factory, he said.
(Adapted from Reuters)