Nestlé Lanka rings in 120 years, unveils Rs. 9 billion investment push
Daily FT: Nestlé Lanka is set to invest Rs. 9 billion over the next four years to expand its manufacturing operations in Sri Lanka, signalling renewed confidence in the country’s domestic market and export potential even amid recent economic challenges.
Speaking at the celebration marking 120 years of Nestlé’s operations in Sri Lanka, Chairman and Managing Director Bernie Stefan said the investment will largely focus on strengthening the company’s manufacturing base in Pannala, with a major emphasis on scaling up export-oriented production lines such as coconut milk powder.
Nestlé’s decision to expand its operations comes at a time when many companies are cautiously navigating Sri Lanka’s economic recovery. However, Stefan said that the company’s long-standing connection with local consumers continues to underpin its confidence in the market.
“We (Sri Lanka) are 23 million people, a big city in India has the same size. But Sri Lanka remains in a strategic position within Nestlé’s South Asian region along with India and Bangladesh. What makes us proud of being here is that Nestlé brands are part of Sri Lankan lives every single day,” he told the Daily FT.
Although Sri Lanka is a relatively small market, Stefan said steady long-term growth remains achievable. “Do I believe that this market will double in a few years? No. But if we can achieve sustainable growth every year, even three to five percent, that is already a very exciting opportunity,” he said.
Reflecting on the milestone anniversary, Stefan said the company’s enduring relationship with Sri Lanka remains central to its future plans. “Over 90% of Nestlé products sold in the country are manufactured locally, which reflects our long-term integration into the Sri Lankan economy. 120 years is just a number. What truly matters is that Nestlé brands have been part of Sri Lankan lives for generations and we are committed to continuing that journey,” he added.
Stefan noted that Nestlé products are consumed extensively across the island. “Every minute, about 5,000 of our products are consumed; whether it is Milo, Nestomalt, Nespray, or Nescafé,” he said.
He explained planned investment will primarily be directed toward upgrading the company’s factory operations and expanding export-oriented production lines. “We’ve always been here to invest in this country, and we see huge potential, both in the domestic market to grow with Sri Lankan consumers, but also as an export hub,” Stefan said.
He outlined that coconut milk powder has become a fast-growing global product category, driven by rising demand for plant-based ingredients and dairy alternatives. “When you look on a global level, coconut milk is becoming an extremely hip and trendy product, especially in the West and in China,” he said.
He also said Nestlé Lanka is already the country’s leading exporter of coconut milk powder, with the product becoming a globally recognised brand originating from Sri Lanka. The company traces the innovation back nearly four decades to a Swiss factory manager who adapted milk powder technology to coconut milk.
He pointed out that the sector has also seen steady volume growth over the years. “When you look at volume growth, we have seen consistently high single-digit to low double-digit growth,” he said.
OSL take:
The continued confidence in Sri Lanka as well as the continuing expansion of operations in Sri Lanka by Nestlé indicates the increasing business confidence in Sri Lanka as well as the business conducive environment in the country. Sri Lanka’s economy has shown great resilience to internal and external challenges through the years with the latest being the unprecedented economic crisis faced by the country in 2022 and the quick turnaround shown by the country by repositioning the country and its economy on a growth trajectory. Given these factors and the country’s strategic positioning in the Indian Ocean, strong trade ties with many foreign countries and the improving ease of doing business environment have all worked to position Sri Lanka as an emerging business destination in the region. Looking at the growth and expansion of the country’s private sector, especially foreign collaborations, foreign businesses/investors could confidently explore the expanding business/investment opportunities in Sri Lanka while also looking at expanding operations through partnerships or joint ventures with local businesses.
| Article Code : | VBS/AT/202603012/Z_3 |