NESTLÉ IS aiming to treble sales in Asia, Oceania and Africa to about SFr50 billion (€41.38 billion) in constant currencies over the next decade as the world’s biggest food firm by sales ramps up operations in emerging markets.

Manufacturers of consumer goods are turning to poorer but fast-growing countries to offset stagnant sales in the developed world, in many parts of which disposable income is shrinking.

Unilever has traditionally led the sector in emerging markets, from where it derives more than half its revenues. The maker of Flora margarine is aiming to double total turnover to about €80 billion in a timeframe most analysts put at about a decade.

Nestlé, which unveiled its targets at an investor seminar in Shanghai this week, looks like “a very credible challenger for Unilever’s self-imposed emerging market crown”, wrote Warren Ackerman, analyst at Société Générale.

Companies slice the globe differently – Nestlé keeps Latin America in the Americas rather than its Asia, Oceania and Africa division, for example – but the Switzerland-based food group is estimated to derive about 40 per cent of revenues from emerging markets.

The growth targets imply a potential compound annual growth rate in organic sales of 11 per cent, calculates Eddy Hargreaves, analyst at Canaccord Genuity. The Asia, Oceania and Africa region contributed a quarter of sales last year and he estimates this figure will rise to about 28 per cent this year. He adds that population growth, inflation, distribution gains and innovation should drive growth closer to 14 per cent.

In outlining its new targets, Nestlé recognises the varied challenges that emerging markets present, including strong local operators in China, aggressive competition across Asia and availability of resources in Africa.

The strength of competition from local groups is illustrated by data from Euromonitor that shows just four of the top 10 food companies in the zone are multinationals. Two, including the third-biggest, Nissin, are from Japan and four are from China and Taiwan.

Nestlé is also aiming to pilot the way in areas such as ageing and obesity. – Copyright The Financial Times Limited 2012