Nestle: Other markets will be affected before the food sector

The head of Nestle Romania believes the currently unpredictability of the market should be viewed cautiously, but says that if the purchasing power was to begin on a downward trend, the food sector would be among the last to be affected.

Domestic turnover of Nestle, the largest food producer worldwide, could amount to almost 200 million euros this year. Although he expects this year to be a “very good year”, with an over 25% sales increase (in RON) against 2007, Nuber is reserved about the market dynamics in the last few months of the year. “It would be a mistake for us to be euphoric. The economic growth in the first half is indeed significant, but the market needs to be analysed in terms of sectors. The economy is very unstable this year, as well, which makes it difficult to predict what will happen from now until the yearend,” explains Nuber. He adds that his company’s big challenge this year has been the depreciation of the RON against the euro, which has been mainly felt in the rise of raw material costs. The sales advance forecast by the company for this year of 30% is similar to the growth rate recorded in 2007 against the previous year. Last year, Nestle Romania’s turnover amounted to 150 million euros, driven forward by the rise in consumption. “It is obvious that the purchasing power will rise in absolute terms this year, as well. The big change on the market in 2008 comes in terms of how consumers choose to spend their money, because of high fuel costs, the rise in interest rates and the appreciation of the euro against the Romanian currency are felt in every individual’s budget,” says Nuber. He believes the food sector, especially the medium segment that the company targets, will be among the last markets affected by the decline in purchasing power. “Consumers will most likely first give up the acquisition of electronics and home appliances or will cut back on other categories of expenses, such as mobile phone expenses,” believes Nestle’s manager.