Additionally, the company will allocate 1.5 billion UAH for the modernization of its factories to enhance product quality, as reported by Alessandro Zanelli, the CEO of Nestlé in Ukraine and Southeast Europe.
Nestlé plans to invest 8 billion UAH in its commercial activities in Ukraine by 2025, particularly in promoting its products within retail chains, as well as 1.5 billion UAH for modernizing its factories to enhance product quality, stated Alessandro Zanelli, CEO of the company in Ukraine and Southeast Europe.
“By 2025, the consumer goods category will continue to grow. However, in 2025, everyone will feel significant pressure on margins. We cannot solely shift this burden onto consumers, as inflation in the country is already quite high. We will have to work on creating the right narrative around our business model,” he said at the “Global Outlook Enduring Change!” event organized by the European Business Association.
Zanelli advised entrepreneurs to identify the driving forces behind their businesses, understand what creates consumer purchasing power, and work on improving efficiency.
Regarding Nestlé in Ukraine, he noted that the company aims to increase its presence in the country by investing around 8 billion UAH in commercial activities, specifically in promoting consumer goods within retail chains. Additionally, approximately 1.5 billion UAH will be invested in upgrading the company’s factories.
The CEO of Nestlé in Ukraine added that the company has been delaying the launch of a new factory in the Volyn region for six months due to ongoing air threats, a lack of builders, and workforce shortages, but it intends to proceed with the launch in March 2025.
Zanelli emphasized that the government should enhance its connection with businesses and assist them in driving economic growth so that investors can understand the prospects for their investments. This is particularly relevant since the future factory will export 35% of its products, contribute to the national budget, and impact European markets.
He also highlighted that despite the war, the Ukrainian consumer market is developing, especially in the consumer goods segment.
“Volume and pricing policy will be the main drivers of its growth. This will result from ongoing adjustments and adaptations of the business model, which is quite robust in Ukraine. We have (Nestlé in Ukraine - IF-U) less than 10 million consumers, but growth continues. There are many trends and significant polarization. Consumers want to see a faster and more efficient process. Businesses recognize this fantastic trend and are eager to engage,” the CEO explained.
Given the issues with energy supply, Zanelli warned that the company anticipates an electricity shortage in the summer, which will lead consumers to adjust their purchasing behavior, resulting in significantly smaller order quantities. Businesses should take this into account.
Moreover, the head of Nestlé in Ukraine pointed out the rise of e-commerce in Ukraine amid the war. According to him, about 30% of consumers in major cities are continuously shopping online. Therefore, food producers need to focus on e-commerce to serve their customers and adjust their budgets for promoting and advertising their products accordingly.
Zanelli noted that currently in Ukraine, due to inflation, around 50-55% of purchasing transactions occur at promotional prices. As a result, many retail chains encourage producers to conduct more advertising campaigns to generate foot traffic. This is why Nestlé in Ukraine has allocated corresponding expenses for 2025.
Nestlé is one of the world's largest food and beverage companies, operating in 187 countries. It offers a wide range of products and services for families and pets, with over 2000 brands.
Nestlé began its operations in Ukraine in 1994 with the opening of a representative office, and in 1998 it acquired a controlling stake in the Lviv Confectionery Factory “Svitoc”, and since 2018, it has owned 100% of the company's shares.
In 2010, Nestlé SA acquired LLC “Technocom” in Kharkiv, a producer of instant noodles under the brand “Mivina”. In 2012, Nestlé Business Service (NBS Europe) was established in Lviv, which is one of seven Nestlé service centers worldwide and provides support services to Nestlé divisions in over 40 countries.
Nestlé's business in Ukraine encompasses various sectors: coffee and beverages, confectionery, culinary (cold sauces, seasonings, soups, instant products), baby and specialized nutrition, ready-to-eat breakfasts, and pet food.
