Nestlé Middle East has invested more than $400m in the region since it was founded in 1997. How has the investment climate in the region evolved during this time? Are further investments in the pipeline? Has recent political turmoil had an impact on your outlook for the region?

MANGHARDT: The Middle East has always been a source of opportunities. Over the past 12 years, we've reached 14 factories for water and 4 for food and beverage products. We employ more than 7,000 people in the Middle East and we have more than 37 offices. We are very proud because on May 1, 2011 we have been the first international organization to open a sales and distribution joint venture in the Kingdom of Saudi Arabia. This is another unique opportunity that we have to grow even further in this region. We always have plans for investments. Over the coming couple of years, we will invest in different manufacturing lines in food and beverages. We may also look at some possible investment in distribution.

2011 is indeed a special year for the Middle East. We have seen the events that have unfolded since the beginning of the year. I have to say, that we are still looking at this region as a huge potential for growth. Our business results for this year are very positive and this is really thanks to the people that we have in this region - 7000 highly dedicated colleagues who really make the difference on a daily basis. We have not stopped doing business in any country of the Middle East despite at times some very difficult situations. We are very proud of having these colleagues representing our brands on a daily basis, irrespective of what is happening around them.

From a manufacturing stand-point, what are the advantages of being based in the UAE?

MANGHARDT: For us, to be based in the UAE has a number of advantages. First of all, Dubai for us is really the hub of the Middle East. We have excellent connections to the 13 countries that we cover. We have very good local infrastructure. We also have a regional office in a free zone which provides tax benefits. We find qualified manpower locally and we have very conducive relationships with the authorities.

What are the key trends in retail at the moment in the UAE?

MANGHARDT: We see a further trade concentration with the opening of a number of outlets for Lulu, Carrefour and Spinney’s. Very recently, the biggest co-op has opened at Al Barsha in Dubai and this really shows the trend of large, more concentrated outlets.

What are the major differences in retail and distribution between the UAE and other countries in the region?

MANGHARDT: In the UAE, we really have a rather high trade concentration. For us, the top ten retailers in the UAE account for close to 60% of our business. This is very different compared to other parts of the Middle East. In Kuwait, for instance, we also have a rather high trade concentration but the co-ops are really the most prominent chain of outlets. You have a part of the Middle East where the trade concentration is very low. There are countries, such as Syria, Iraq and Yemen, where the top ten retailers account for less than 5% of our turnover in these countries. In between you have Saudi Arabia and Lebanon, where, for us, the top ten retailers will account for close to 20%. So you really have to be able to be successful both with key retailers and key accounts and at the same time in the general trade with a more traditional way of doing business also at times through wholesalers and distributors. In some countries, we also have a strong presence in terms of van sales. In Syria, and now in Saudi, where we are establishing more than 150 vans to really cover the lower trade and what we call the bakala stores.

How are consumer tastes and consumer behaviour changing? How successful have retailers and producers been at keeping up with the changes?

MANGHARDT: The consumer taste and preference for products is very much now evolving on both sides. On one side, looking at premium products, you see it for instance in product like KIT KAT Senses, MAGGI Excellence soup range, or NESPRESSO. On the other side of the spectrum, you have increasing demand for what we call PPP products – popularly positioned products – which are more economical products such as our MAGGI powder, which we have launched last year in Syria, or NESCAFE 3-in-1, which is called Matinal that we have launched just this year in Syria and are now expanding in Iraq and eventually in Yemen.

How are international FMCG brands positioned and perceived in the market versus local or regional brands? What role do private label brands play in the market? Do you foresee private label brands taking more market share in the medium-term?

MANGHARDT: I can say that international brands are very well perceived in the Middle East. The Middle East is a region that is open to the rest of the world. We have been present, as far as  Nestlé  is concerned, for more than 75 years in the Middle East. We have very strong market share. Consumers are loyal to our brands and very much appreciate the quality that we offer and we are generally perceived as the number one nutrition, health and wellness company in this part of the world. Private label brands are present in key accounts, no doubt about it. But they tend to be focusing more on what I would call commodity type products and categories. The difference that we make is that we invest heavily in innovation and renovation of our products. This is really what helps us to lead our growth and to lead the future of the categories we are present in. The private label brands tend to be a bit more of me-too type of products. We see that they answer some consumer needs while we answer different needs for different types of consumers.