Nestlé Nigeria is betting on the now stable FX environment and a surge in its local sourcing to maintain the profitability streak it began at the fourth quarter of 2024 after taking hit by the naira devaluation in 2023. In this exclusive interview with BusinessDay’s Wasiu Alli, CEO Wassim Elhusseini explains how the food giant turned the tide. Excerpts:
Nestlé Nigeria returned to profitability in H1 2025 after previous quarters of pressure. What were the key decisions or operational levers that drove this turnaround?
Our return to profitability in H1 2025 underscores our steadfast commitment to operational excellence, supported by our dedicated team and stakeholders. Key decisions that facilitated this turnaround included: Focused Revenue Management — we implemented targeted pricing strategies and promotional activities that aligned with market demands, enabling us to capture greater market share.
Cost Control — By enforcing strict cost management practices and optimizing working capital, we improved our operational efficiency. This included renegotiating supplier contracts and enhancing procurement processes. Enhanced Route-to-Market Execution — Strengthening our distribution network and logistics capabilities allowed us to improve product availability and reduce lead times, ensuring that our products reached consumers effectively. Increased Value to Consumers — Step up in marketing and trade activities with focus on giving more value to the consumers.
Has the FX environment genuinely improved, or has Nestlé simply adapted better? What specific hedging or sourcing strategies helped reduce the FX impact?
The macro FX environment has shown relative stability over the past year, which has certainly aided in making more accurate projections for business sustainability. However, Nestlé has also adapted effectively to the prevailing conditions. We have implemented several specific hedging strategies, including: Local Procurement Initiatives — By increasing our local sourcing efforts, we minimize the need for foreign currency transactions, further reducing our exposure to FX volatility.
Leverage forex liquidity and settle forex obligations promptly and reduce risk and volatility. These strategies collectively enable us to navigate the FX landscape effectively, ensuring that we maintain operational efficiency and profitability.
Do you see this profitability streak sustained going forward, especially as volatility still persists albeit mildly?
Given our team’s robust capability to manage volatility in an ever-evolving business landscape, we are optimistic about sustaining our profitability streak. Our focus remains on: Driving Innovation and Renovation: We are committed to continuously evolving our product offerings to meet changing consumer preferences and needs, ensuring that we remain relevant in the market.
Margin Management Initiatives: We will continue to implement effective margin management strategies, which include cost control measures and optimizing our pricing strategies. Stakeholder Value Creation: Our priority is to deliver sustainable value to all our stakeholders, which reinforces our commitment to long-term growth.
What’s your strategy for balancing affordability with profitability, particularly for core products like Milo and Maggi?
In the context of Nigeria’s food and beverage market, we recognise the significant challenge posed by declining consumer purchasing power due to rising inflation and currency depreciation. To address this, Nestlé Nigeria is committed to a thoughtful strategy that balances affordability with profitability.
Diverse Product Portfolio: We provide a range of quality nutrition options that cater to different consumer segments. By offering smaller, more affordable pack sizes for key brands like MAGGI, MILO, and Golden Morn, we ensure that essential nutrition remains accessible to all households.
Innovation with Local Ingredients: We prioritize the use of locally sourced ingredients wherever possible. This not only helps to reduce production costs but also stabilizes pricing, allowing us to maintain affordability without compromising on quality.
Value-Added Initiatives: We continuously seek innovative ways to enhance our products and services, ensuring that we deliver exceptional value to consumers. This includes reformulating products to meet nutritional needs.
Consumer Engagement: By actively engaging with our consumers, we gain insights into their needs and preferences, allowing us to tailor our offerings effectively. This responsiveness helps us maintain loyalty while ensuring that our products remain accessible.
Nestlé has historically aimed to localise its sourcing. What percentage of your inputs is currently local, and how has this evolved recently?
Responsible local sourcing has been a strategic priority for Nestlé over the past 13 years. We have actively collaborated with farmers and stakeholders across our value chain to enhance the quality of locally sourced agricultural inputs. As of now, over 80% of our agricultural raw materials are sourced locally. This significant achievement reflects our commitment to supporting the local economy and reducing our environmental footprint.
Recently, we have made concerted efforts to further increase this percentage by investing in supplier capacity building and capability enhancement programs. These initiatives not only aim to boost local sourcing but also ensure that we maintain high-quality standards across our products. Our focus on local sourcing aligns with our broader sustainability goals and reinforces our commitment to delivering nutritious food while fostering economic development within the communities we serve.
Has the company shifted its innovation strategy in response to changing consumer preferences or economic constraints?
At Nestlé, our innovation strategy is fundamentally consumer-led, focusing on delighting and meeting the evolving needs of our consumers while maintaining our commitment to quality and safety standards. In response to changing consumer preferences and economic constraints, we have indeed adapted our approach.
Consumer-Centric Innovations: We actively monitor consumer trends and preferences, allowing us to innovate products that resonate with their needs. This includes developing healthier options, convenient packaging, and products that cater to local tastes.
Utilization of Locally Sourced Ingredients: To mitigate production costs and stabilize pricing, we have increased our use of locally sourced ingredients. This not only supports local farmers but also helps us maintain competitive pricing, ensuring that our trusted Nestlé products remain accessible to more households.
Sustainable Practices: We have integrated sustainability into our innovation processes, focusing on environmentally friendly practices. This includes reducing packaging waste and enhancing the nutritional profile of our products.
Agility and Flexibility: Our innovation framework allows us to be agile and responsive to market changes. This flexibility enables us to pivot quickly in response to economic fluctuations or shifts in consumer behavior.
Read also: Nestlé Nigeria extends turnaround with N50.6bn H1 profit
What is your assessment of current government policies affecting the FMCG sector, especially around FX access, food security, and local manufacturing and what policy shifts would make the most meaningful difference to your cost base or ability to grow?
Government policies play a crucial role in shaping the FMCG sector in Nigeria. We appreciate the stable and predictable current FX policy, which significantly reduces uncertainty for essential manufacturing. This stability is vital for making informed business decisions and planning for the future. However, there are areas where further improvements could have a meaningful impact on our cost base and growth potential:
Logistics Improvement: Enhanced infrastructure and logistics support would reduce transportation costs and improve supply chain efficiency. This is essential for minimizing input costs and ensuring timely product availability.
Energy Cost Stability: Addressing energy cost volatility is critical. By stabilizing energy prices and improving access to reliable energy sources, we can lower production costs, which would directly benefit our pricing strategy and profitability.
Support for Local Manufacturing: Continued constructive public-private dialogue is essential to align policy design with the needs of the FMCG sector. Policies that incentivize local manufacturing, such as tax breaks or subsidies for local producers, would encourage investment and innovation.
Food Security Initiatives: Policies aimed at enhancing food security, such as supporting local farmers and improving agricultural practices, would contribute to a more stable supply of raw materials, further reducing dependency on imports.
Can you share updates on Nestlé’s sustainability and nutrition goals in Nigeria? How are you measuring impact?
At Nestlé, nutrition is at the heart of our mission to unlock the power of food to enhance the quality of life for everyone, both today and for future generations. In Nigeria, we have adopted fortification as a key strategy to combat malnutrition and micronutrient deficiencies. Currently, over 80% of our product portfolio is fortified with essential micronutrients, including iron, which reflects our commitment to improving public health. Our approach to sustainability is comprehensive and multifaceted, aiming not only to meet consumer needs but also to contribute positively to the environment and society.
Key components of our sustainability goals include: Net Zero Emissions: We are committed to achieving net zero emissions across our operations, which involves reducing our carbon footprint and enhancing energy efficiency.
Sustainable Supply Chains: We strive to maintain sustainable supply chains by working closely with local farmers and suppliers, ensuring responsible sourcing practices that benefit both the economy and the environment.
Regenerative Agriculture: We are advancing regenerative agricultural practices that promote biodiversity and soil health, contributing to long-term food security. Water Stewardship: Our initiatives focus on improving water management and stewardship, ensuring that water resources are used sustainably and responsibly.
Youth and Women Empowerment: We prioritize programs that empower young people and women, creating opportunities for skill development and entrepreneurship. Community Engagement: We are dedicated to supporting thriving communities by providing access to clean and safe water, nutrition education, and responsible local sourcing initiatives.
To measure our impact, we employ a variety of metrics, including community feedback and environmental sustainability assessments. Regular monitoring and evaluation allow us to refine our strategies and ensure that we are making meaningful progress towards our goals.
What are your top three strategic priorities over the next 12–18 months?
In the coming 12 to 18 months, our strategic priorities at Nestlé will focus on three key areas: Employee Well-Being and Inclusion: We are committed to caring for our people by fostering a healthy and inclusive working environment. This includes providing ongoing training and empowerment opportunities to ensure that our workforce is equipped to meet the challenges ahead. We believe that a motivated and diverse team is essential for driving innovation and achieving our goals.
Margin Management and Innovation: We will continue to prioritize improving our margin management while driving innovation and renovation across our product lines. By focusing on consumer insights and evolving market trends, we aim to develop products that not only meet changing consumer needs but also enhance our profitability.
Community Investment and Sustainable Value Creation: Our dedication to maintaining investment in community programs will remain a top priority. We aim to create sustainable value for our stakeholders by supporting initiatives that promote nutrition, education, and economic development. This includes empowering local communities and ensuring responsible sourcing practices that benefit both the environment and society.
