NESTLE (4707) - Nestle Malaysia in RM100 a share club, thanks to innovation


The Sun/Zulfadhli Zaki

KUALA LUMPUR: If you had believed in Nestle Malaysia Holdings Bhd MD Alois Hofbauer (pix) when he took the helm of the group in 2013 and invested in the group, you would now be part of a novel group of investors in an organisation whose share has passed the RM100 apiece mark.

The group’s share price has appreciated 75% in the last five years since Hofbauer brought in his strategy of fuel, innovate and transform to drive growth.

It is not the work of only one man, however. In fact, the journey to this milestone in Nestle Malaysia’s 105-year history involved more than 6,000 of its own people – from stockists in its warehouse to the highest level of management – turning the group into what Hofbauer calls an “innovation machine”.

This was done via a twofold approach of first convincing employees that their ideas would be taken seriously and second that they would make it work in the marketplace.

“We created this culture where innovation is rewarded.When you innovate basically you are seen by the company – not only that you can express yourself, you are empowered to bring new ideas to the company and you see what you have created in the company environment,” Hofbauer explained when met late last year, adding that this led to ideas coming from all levels in the group.

These ideas were not only focused on new products but also processes and new business models. An annual excellence in innovation award progressed to one which carried with it a US$10,000 (RM40,000) cash prize and two business-class air tickets to Europe.

The culture of “Idea is King” has translated into sales. The group made about RM100 million from new product sales in 2013, and managed to quadruple that to RM400 million, contributing 50% to the 4% growth in sales in the food and beverage business in a market which is at best flat, or in reality has been in negative growth in recent times.

Hofbauer, however, sees light at the end of the tunnel for the industry, citing strong macroeconomic figures as well as its own growth over the last few years as signs of improving consumer sentiment.

Nestle Malaysia’s food and beverage sales have been progressively growing – from 1% in 2015, 3% in 2016 and to 4% or RM4 billion in 2017.

“We are now recognised as the most innovative, most speedy company when it comes to bringing new products and offerings and these are products which are created in Malaysia for Malaysians, which makes a big difference.

“How much more Malaysian can you be than Kit-Kat Nasi Lemak, which doesn’t exist anywhere else in the world?” Hofbauer asked, adding that the product is one of its best sellers.