Nestle Sells Products Up Amazon River

  

                         

Nestlé to sail Amazon tributaries to reach consumers

Nestlé, the world's largest food company, is sending a boat with 1,000 square feet of supermarket space to 18 small cities and 800,000 potential consumers on the Pará and Xingu rivers in Brazil, before starting the journey again. The vessel will carry 300 different goods including chocolate, yogurt, ice cream and juices.

By Tom Mulier and Iuri Dantas

Bloomberg News

 

 

Nestlé is sailing a supermarket barge down two Amazon River tributaries as it competes with Unilever to reach emerging-market customers cut off from branded goods.

The world's largest food company is sending a boat with 1,000 square feet of supermarket space to 18 small cities and 800,000 potential consumers on the Pará and Xingu rivers in Brazil, before starting the journey again. The vessel will carry 300 different goods including chocolate, yogurt, ice cream and juices.

"Direct distribution gives them a competitive edge over regional competitors who don't have the resources to do this kind of thing," said James Targett, an analyst at Consumer Equity Research in London.

Nestlé expects as many as 1 billion people in emerging markets to exit poverty and be able to afford its products in the coming decade. The food maker has adapted its products in such regions by offering smaller, cheaper versions of items such as Alpino ice cream and Ninho milk powder through direct distribution, making them more accessible to low-income shoppers.
Unilever has also been building a distribution network into Brazil's shantytowns.

River streets
"Rivers act as streets and avenues," said Nestlé Brazil President Ivan Zurita. People's "daily lives here are linked to fishing, to the region they live in. They don't have the time or money to get to the capital."

Nestlé has invested $560,000 in products and partnerships with local suppliers for the project, Zurita said. If successful, it may expand in Brazil or to other countries such as the Philippines, he said.

Supermarket purchases in Brazil's impoverished northern and northeast regions have outpaced growth from richer states in the south and southeast for the past two years as social programs and a higher minimum wage increased disposable income for the poor, said Sussumu Honda, head of the national supermarkets association.
Brazil's supermarket sales rose a record 15 percent in March from a year earlier, according to data from the country's statistics agency. The increased demand means supermarkets in remote areas have had difficulty keeping products on the shelves as suppliers are unable to meet orders, Honda said.

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