The design for the factory is made up of easy-to assemble components and can be built in half the time of a traditional building for about 50%-60% of the cost including a ready-to-use generator and boiler, staff canteen and changing rooms for employees.
Cheaper way to enter the market
“We developed this concept because we wanted to increase the speed of implementation of new facilities,” said Fenollosa.
“We were looking for a fast, flexible and cheaper way to enter some developing countries.
“Africa is one of the best places for this kind of initiative because it is a high risk in terms of business. This is the best way to get into the market here even if it is small to begin with, we want to be there because there is a business opportunity there we want to exploit.”
Fenollosa added the first areas it will target are the sub-Saharan Africa countries Mozambique, Malawi, Rwanda, Tanzania and Uganda.
“The modular concept will be implemented here due to lack of infrastructure. We will start with a modest business as a small investment to see how the categories develop. If it works we will look at a more permanent infrastructure.
Limited investment
“Limited investment is key because we can afford to do it in this kind of economy that is still emerging in a developing country. We will be implementing the first factory in the next one to three years’ time. We are just waiting for the first kind of business case that requires this type of factory.”
He added Nestlé will target ‘simple categories’ that do not require a lot of processing and look towards ‘more mixing and packaging and repackaging’.
“The modular factory concept is very flexible in terms of repacking coffee and milk powder. We want to do it locally, generating value at the local level, buying raw materials. It’s only adapted to categories like beverages and cocoa, but not fully fledged processing that requires a big manufacturing factory.”
Fenollosa said with bigger countries there is a ‘more solid economy’ which is different to what it is trying to achieve with the modular design.
“Later, we will work on a more solid solution of bricks and mortar. For now, this is an easy way to try to see how it works and what kind of products consumers want in this environment. If this works we will consolidate the factories in a different way but for now, this is good for emerging economies.”