Radar | Feb 01,2020
Nestle Pulls out of Water Investment
February 15 , 2020
By GELILA SAMUEL ( FORTUNE STAFF WRITER
)
The Swiss company maintains investments in Nestle NIDO, Nestle Maggie and Nescafe
Nestle Water, Abyssinia. Nestle Water, a wing of the Swiss multinational company, cut ties with Great Abyssinia Spring Waters after three years of partnership at the end of last month.
Nestle Water, subsidiary of the Nestle Group, transferred its 51pc share to the original owner, Great Abyssinia, which ventured into the business after changing its name to Blue Mountain. Tewdros Zerihun, Gobezayheu Zerihun and Dawit Zerihun, the owners of Great Abyssinia, transferred the majority share of the company to Nestle Water back in 2016.
Nestle, which has investments in Nestle NIDO, Nestle Maggie and Nescafe, has lately decided to exit the water business in Ethiopia. The financial transaction for the transfer of the shares was not disclosed.
Nestle Waters.
“We review our business operations regularly to ensure that we continue to deliver sustainable results," said Bethlehem Hailu, corporate affairs & sustainability manager for Asia, the Middle East and Africa at Nestlé Waters. "We're making changes to our bottled water businesses globally and this is reflected in Ethiopia."
Following the departure, Nestle laid off 17 employees from the head office after compensating them. However, there has been no impact on the employees at its manufacturing site in Sululta, and the terms and conditions of their employment agreements remain unchanged.
Nestle Ethiopia commenced operations in 2006, serving as the headquarters of subsidiary Nestle Horn of Africa Cluster that oversees market development across Djibouti, Eritrea, Ethiopia and Somalia.
The company also transferred the landscape management rehabilitation project to Great Abyssinia Spring Waters. It took up the project in partnership with the Oromia Regional Government and the Water & Land Resource Center of Addis Abeba University. A research contract for the project, which included a 3.5 million Br grant from Nestle Ethiopia to hire 20 researchers and surveyors, has been progressing for two years.
Nestle Water built a water station in Sululta that provides 20,000lt of water a day to the surrounding community. In partnership with the town municipality, the bottler managed to dig two deep wells, which are owned by the municipality, to enhance the flow of the water to meet the city’s demand.
Great Abyssinia was founded in the early 1990s with a sole owner called Abyssinia Tea & Coffee Enterprise that had 10,000 Br in initial investment capital, an old and rundown machine and 10 employees. Now it has ventured into multiple businesses ranging from coffee export, water and soft drink bottling, juice processing and operating a commercial plaza.
Great Abyssinia Spring Waters, which was established in 2007, sources the water from the plant located in Sululta, near the capital. Currently, the plant operates with 213 employees in the country.
The bottled water business is one of the fast-growing industries with 97 bottlers that have an annual production of 3.5 billion litres. However, the production only satisfies five percent of the growing population of over 100 million in the country.
The effect of the multinational company leaving the industry is not something that can be forecasted, according to Zewdie Shibere (PhD), assistant professor of business administration at Addis Abeba University's School of Business & Economics.
“It depends on the performance and management of the local owners," he said. “The country must improve its investment climate as to not chase away the foreign direct investment."
PUBLISHED ON
Feb 15,2020 [ VOL
20 , NO
1033]
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