Nestlé to build first food factory in Saudi Arabia with US$72M investment

SAUDI ARABIA – Nestlé has committed to building its first food factory in Saudi Arabia, following the signing of a contract for a 117,000 square meter plot in Jeddah’s Third Industrial City. 

The factory, which will focus on producing infant-nutrition products, is scheduled to open in 2025. Its initial investment is SAR270m (US$72m).

This new factory fulfills Nestlé’s promise in late 2022, when it announced plans to invest SAR7bn in Saudi Arabia over the next ten years. 

The company sees this move as part of its broader strategy to expand its long-standing presence in the Kingdom. 

Nestlé’s plans also align with Saudi Arabia’s Vision 2030 initiative, which aims to increase local food production to enhance food security.

The Saudi Authority for Industrial Cities and Technology Zones (MODON) revealed that this factory will generate hundreds of direct and indirect jobs in its initial phase. 

With an expected annual production capacity of 15,000 tons, it represents a significant step in the Kingdom’s efforts to attract foreign investment. 

Recent figures from the Saudi Central Bank highlighted a 29.1% increase in foreign direct investment (FDI) inflows during the third quarter of 2023 compared to the previous quarter, with FDI rising from SAR6.2bn to SAR7.99bn.

In addition to this development, UK-based snacking giant Pladis recently announced plans to establish a regional headquarters in Saudi Arabia. 

Nestlé has also been active in the region, selling its Cremora creamers business in South Africa to dairy company Lactalis SA. 

Cremora, a household brand in South Africa for over 77 years, will continue production at two Nestlé facilities in Babelegi and Potchefstroom, which are included in the deal. Production in Zimbabwe, however, will cease after the sale.

Despite the sale of Cremora, Nestlé has reaffirmed its commitment to economic development in Southern and Eastern Africa, emphasizing its focus on long-term sustainability. 

The sale is not expected to impact jobs at the South African production sites.

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