Nestlé to spend $103m on expansion in China

Nestlé is to invest CHF100 million (US$103m) in its Chinese operations, expanding production of pet food to capitalise on soaring pet ownership in the world’s second largest economy.

The Swiss producer of canned pet food under the Purina brand said it planned to expand capacity at its factory complex in Tianjin, east of the capital Beijing. The money will go towards building new production lines for the Purina plant, building Asia’s first vegan food line and upgrading and increasing production of its Chenzhen confectionery wafers.

Growth in the pet food market in China is faster than in food for its owners. According to Goumin.com, a social media site for pet owners, more than CNY200bn ($29bn) was spent on pet food and supplies last year – an 18 per cent increase on 2018. At the same time, retail sales declined. Pet ownership has soared as increasing numbers of Chinese workers choose to live alone and remain childless.

Nestlé said the investment was a sign of its commitment to helping China’s consumers after the coronavirus epidemic ravaged the economy. The fallout from locking tens of millions of citizens into their homes for two months to halt the virus’ spread caused quarterly GDP to contract for the first time since the communist country opened up to Western-style capitalism.

“Nestlé has been continuously making investments in Tianjin city, effectively boosting local economic growth and driving overall development of the local food industry,” said Zheng Weiming, Communist Party Secretary and official in charge of the industrial park that hosts the food producer’s plant. “Since the epidemic in China, Nestlé has actively responded to the government’s call to promote economic development and continued to increase its investment and expand production in Tianjin.”

Nestlé has been operating for more than 30 years in China and it is now the firm’s second-largest market, comprising 31 factories and three research and development sites. The investment follows the announcement earlier this year of a $700m upgrade of the company’s factories in Mexico, including the construction of a coffee factory.