The leading food and beverage business from Switzerland Nestlé (VTX:NESN) revealed on Sunday they have signed an agreement for acquiring the Egyptian instant coffee firm Caravan Marketing, which owns the brand Bonjorno. Once the acquisition is complete, the Bonjorno brand will be added to Nestlé Egypt’s portfolio. The cost of this acquisition has not been disclosed, though.
It was also revealed that employees of the two companies, Caravan and Nestlé Egypt, will now be blended to form a single team that can drive growth for the business. They have promised a smooth transition phase.
This acquisition shows how Nestlé is serious about the growing market of Egypt. In fact, the soluble coffee segment is gaining popularity rapidly among a lot of Egyptians in recent years, and naturally, the company wants a pie of this market. Yasser Abdul Malak, who is the CEO and Chairperson of Nestlé Egypt, reiterated this saying the Egyptian market was very important to the global strategy of the business.
Nestlé SA Investing a Lot of Money in the Egyptian Market
Actually, Nestlé has been pouring a lot of money in the country in the last five years. Yasser revealed this to be almost 1 billion EGP, which is equivalent to $53 million. The money has been invested in developing both manufacturing and distribution facilities, and also to develop skills in the country. But that is just a start. Nestlé SA is soon going to invest even more in Egypt.
Nestlé (VTX:NESN) at this time has two factories in the country that employ more than 3000 workers. Yasser did not comment on whether the business has plans of establishing a third, given the growing importance of Egypt.
Caravan Marketing a Good Acquisition for Nestlé
The acquisition makes sense for Nestlé, as they can now gain from the marketing and distribution network and capabilities of Caravan. Sales should improve following a better retail presence, as Caravan has a major presence in Egypt’s drinks, food, and retail space. Nestlé should gain more by focusing on the region’s soluble coffee market.
Amr Barakat, the Chairperson of Caravan, was happy with the agreement. He said this will complement the success of Bonjorno over the last many years. “We are confident that Nestlé will ensure bigger investment opportunities to export Bonjorno products in the future”.
Caravan Marketing was set up in 2003 and makes soluble coffee products at the factories in the country. The coffee is sold under the Bonjorno Café brand.