Nestle Adjusts As Stockpiling Grows In Asia And North Africa

The Russian invasion of Ukraine has driven up energy and grain prices to all-time highs, increasing the cost of packaged goods. This has been felt most acutely in Asia and North Africa, where people spend a larger proportion of their income on food and fuel than in the United States and Europe, prompting some shoppers to stockpile non-perishable items.

Nestle, the world’s largest packaged food company and owner of over 2,000 brands such as Cheerios, Nescafe, and Maggi, has taken note of the trend.

According to Karim Al Bitar, head of consumer research and market intelligence at Nestle’s Middle East and North Africa (MENA) unit, the Swiss group is adapting its product ranges in the region to “make them more meaningful to the consumer” and is considering making some products “more affordable.”

This could include increasing pack sizes and switching to cheaper ingredients.

“Nestle is seeing hoarding with bouillon, to an extent soups, coffee for sure,” Al Bitar said.

He added that Maggi products and Nescafe coffee sachets are popular stockpiling items.

Nestle is working with local partners to overcome supply challenges and has managed to keep stock on shelves so far, according to an emailed statement from the company.

The MENA region contributes more than 4 per cent of Nestle’s annual sales, or 3.7 billion Swiss francs ($3.9 billion). Central Asia accounts for approximately 9 per cent, or $8 billion in francs.

According to Hani Weiss, CEO of Majid Al Futtaim Retail, which operates more than 450 Carrefour stores in 16 countries across the Middle East, Africa, and Asia, shoppers are spending less on non-essentials such as electronics, clothing, and household goods, while demand for packaged food and personal care items is increasing.

“What does that tell us that people are concerned about? Stock availability,” Weiss said, adding the retailer was seeing about 9.5 per cent inflation on average, and particular pressure in countries such as Egypt, Kenya and Georgia.

Several North African and Central Asian countries are experiencing recurring shortages of basic necessities. According to Euromonitor International analyst Kamile Botyriute, people in Tunisia, Algeria, Libya, and Morocco are struggling to find flour, sugar, and baked goods. According to Botyriute, some Tunisian shops began rationing items in August to prevent consumers from hoarding.

“I have bought about 10 50-kilogram bags of flour and just as much of sugar,” Eldar, 28, an entrepreneur based in Almaty, Kazakhstan said. “There are rumors that sugar shortages are expected and I wanted to have a stockpile.”

In many Central Asian and North African countries, inflation is rising faster than in North America or Europe, where consumer price growth in the 19 eurozone countries accelerated to 8.9 per cent in July.

Annual inflation in Turkey reached a 24-year high of 80% in August, while Egypt’s accelerated to 13.6 per cent in July. In many cases, weakening local currencies raise import prices.

“In Turkey, consumers are adjusting to the reality of extremely high inflation. Despite higher prices, we see consumer demand and market volumes holding up, due partly to pantry loading,” Unilever CEO Alan Jope said in July.

(Adapted from IPStock.news.com)

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