Food mogul Nestlé has recommenced operations in Azerbaijan through a registered company following suspended trade of its entire product range in March due to supply problems.
The initial trade suspension came amid reports that there had been corruption between its distribution partner Aylin and the country’s custom authorities but Nestlé only disclosed it was having “some supply problems” and would work on commencing operations again as soon as possible.
The Swiss head-quartered firm has now registered a US$200,000 operational company Nestlé Azərbaycan that will market and promote Nestlé products across the country.
Mark Pothast, managing director of Nestlé in the Eurasia region, said the move should “strengthen our positions in the Azerbaijan market.”
“We will start selling the products to the retail chains and shops through the distributors we are currently holding negotiations with,” Pothast said.
Marina Zibareva, corporate communications manager for Nestlé Rossiya LLC based in Russia, told ConfectioneryNews.com that the firm had chosen to invest in an operational company in Azerbaijan as it enables “control of the whole chain to make sure that consumers get a wide range of products of superior quality.”
Nestlé will need to be 'careful' and 'transparent'…
This move signals a first for Nestlé as it now has a registered base in Azerbaijan to organise distribution, marketing and promotion of its products. Previously it had no company operations in the country and just supplied products to market via local distributors.
Nestlé however continues to manufacture products outside of Azerbaijan.
Joseph Sherman, executive director of the Azerbaijan Centre for Business and Public Policy – an independent US-based research firm focused on initiating dialogue and scholarship on business, economic and economic development issues of the country – said that this move is an “interesting and scary” revelation.
When registering a company in Azerbaijan, firms do not have to list ownership, Sherman told this publication, therefore it is unclear if companies are partly government-owned or directed.
“I think Nestlé is trying to do things legitimately. It’s a well-respected global company who will try their best to follow good business practice,” he said.
But he detailed that the regulatory controls within the country, across all the principle industries, are not as strict as other global markets.
Foreign companies working in Azerbaijan often face the challenge of balancing good business practice with effective operations, he observed.
“Nestlé will have to be careful and very transparent about its work in the country,” he added.
The food firm has given the general director’s post to an employee that has been working for Nestlé for 13 years.
The new operations will provide a wide portfolio of products to Azerbaijan, including coffee, cocoa beverages, culinary products, baby food, ice cream, chocolate and breakfast cereals.