Sri Lanka navigated economic crisis and now on a consolidation phase – Nestle MD

Sri Lanka has navigated an economic crisis and now the country is in a consolidation phase, said Managing Director of Nestlé Lanka, Bernie Stefan. He said he arrived in Sri Lanka during the height of the economic crisis and saw what people went through.

“What the country now needs is not a quick fix but long-standing policies that are currently in place and these need to continue.”

He also opined that Brain Drain is an issue and ‘brain capital’ is needed to build a country and steps should be taken to reverse it.

Following is a Q&A with Managing Director of Nestlé Lanka, Bernie Stefan in our EXPAT Chit Chat feature.

Q: You have been a part of Nestlé globally for a long time, moving into different roles across regions. Since you took on the role of Managing Director for Nestlé Lanka, what has your experience been thus far? And what are some of the key contributions you have made to the company?

A: I arrived in Sri Lanka and took over Nestlé Lanka during the peak of the economic crisis and our priorities were to look after the staff and towards this, several meaningful steps were taken to help them during the crisis. We even went to the extent of financially assisting our teams.

After the crisis settled down, we witnessed growing incidents of nutritional deficiencies amongst consumers due to various reasons. To this end, our portfolio of micronutrient fortified products was helpful to support their nutritional needs.

After the economic crisis and with the high inflation era ending, we also reduced our prices in most of our products giving value back to consumers. You need to constantly review your price points according to the buying power of the people and we too have towed this line.

Q: Nestlé Lanka has now been in operations in Sri Lanka over 115 years. With such an established local footprint, what are some of the key initiatives that the company does to support the local communities of Sri Lanka?

A: We have been engaging with the local community for over 100 years and have been sourcing milk and coconut from them. We procured Rs. 4.3 billion worth of fresh milk from our local dairy farmers last year, and have invested over Rs. 80 million in 2024 to develop small-scale commercial dairy farmers. In addition, we procure coconuts from the local farming community. In 2023, we procured Rs. 6.3 billion worth of coconut from local farmers.

We also introduced the ‘work from home’ system for our employees, where they had the option to work two days of the week from home. As we implement flexible workdays, we also encourage our teams to come together and engage in team building, which further builds bonds amongst our employees.

Q: The production of Coconut Milk Powder is quite unique to Sri Lanka, and Nestlé produces and markets this product through the household brand, MAGGI – which is not only sold in Sri Lanka but is also exported to other regions. Tell us a little bit about the impact the production of Coconut Milk Powder has on the business, also touching on the impact it has on the local community?

A: MAGGI Coconut Milk Powder is an innovative product manufactured in our state-of-the-art factory in Kurunegala. As this is a 100% local value-added product, we procure coconuts from over 8,000 small to medium-scale farmers in Sri Lanka. Over 80% of MAGGI Coconut Milk Powder is exported to 60 countries worldwide, drawing in Rs. 13.7 billion worth of FOREX earnings. As we export to different markets, we adopt different labelling for the product to curate to their culture; one such example being the Gulf.

Q: Diving more into Nestlé’s local footprint in Sri Lanka – from your perspective, what would you say are some of the key factors you consider when building some of Nestlé Lanka’s household brands such as NESTOMALT, MILO etc.?

A: For decades, our products have been household favorites in the country, and one of the biggest brands we sell only in Sri Lanka is NESTOMALT.

In addition to our regular engagement with consumers, we have been reaching out to them through sporting activities such as the NESTOMALT Marathon for several years. MILO is another popular brand sought-after by mothers for their school-going children. MILO believes that sports is a great teacher. Hence, we sponsor several school sporting events ranging from swimming, netball and football.

These initiatives which we have been sponsoring for several decades help us engage with around 24,000 individuals all over the island and these brands have now become a part of their daily life.

Q: Nestlé Lanka is known for manufacturing over 90% of its products locally in its state-of-the-art factory located in Kurunegala. Would you be able to give us some insights into what goes behind the production of some of Nestlé’s most loved brands?

A: One of our priorities in our production process at the Kurunegala factory is maintaining high quality and hygiene practices as per the local and global standards. In addition, we also have stringent quality tests done at our laboratories for all raw materials including when procuring liquid milk.

Q: How important is Research and development in your institution?

A: We enjoy a unique advantage in having a mix of global and local R&D teams. Locally we have about a 15-member R&D team that include food scientists and university graduates. The relaunched MAGGI PapareKottu noodle is 100% developed locally. By being a global player, we gain a tremendous advantage through the research by our other markets as well, including our R&D centers in Switzerland, Singapore and India.

Q: What is your view on the subject of climate change? And what has the company done to make their operations greener and more sustainable?

A: This is a key area we have given emphasis to and invested heavily in. Last year we moved to 100% renewable electricity in our factory in Kurunegala. Our newest endeavor would be the launch of the Biomass Boiler this year to replace furnace oil with biofuel for steam production, thereby reducing our greenhouse gas emissions in our manufacturing operations.

In addition to giving multiple cost benefits to our factory and increasing production it will firstly help to reduce the country’s import bill to a certain extent as we no longer become a consumer of furnace oil. By using biomass, it also helps our efforts of reaching Net zero by 2050.

We are also working towards purchasing biofuel from our local farmers, giving them a new source of income that will stop the current environmental emissions/pollution that is happening due to the uncontrolled burning of these materials.

We have a clear road map to reach net zero on greenhouse gases by 2050.

Q: The company also plays a big part in making their operations and products more sustainable. Nestlé Lanka was known for making the first move in shifting from plastic to paper straws back in 2019 – becoming pioneers in addressing the issue of plastic packaging in Sri Lanka. Has there been any progress since then on addressing the subject of plastic pollution?

A: We started this green initiative in 2018 for the entire value chain. We also observe that 95% of greenhouse emissions are not only emitted from the factory but happen outside upstream. Hence, we now work with our suppliers to make the value chain greener.

We also work with the Sri Lanka Climate fund towards helping the coconut industry to be greener and Nestlé Lanka is the first to do this. Together, we focus on reducing emissions in the transport sector and also explore moving towards using electric vehicles. We were also a pioneer to reduce plastic packaging material introducing paper straws in our MILO RTD packs in 2019 long before government ruling in this sector. Furthermore, by next year, over 90% of our packaging will be designed for recycling, and we are working with local partners to develop local solutions and applications.

As part of our community initiatives, we partnered with the Ministry of Education and Central Environmental Authority to launch the School Waste Management programme in 2020 to educate school children about responsible waste disposal and have reached 700,000 students across 1,000 schools around the country thus far.

Q: Can you recall an unforgettable incident in Sri Lanka?

A: I once went on a weekend trip with some of my friends who came down to Sri Lanka from overseas, and we were exploring a mountain road close to Ella and got lost. When we reached the top of the mountain, we came across a Buddhist Monastery that was still under construction, and we simply wanted to ask for the directions to get back. This led to us spending a few hours in the monastery, and sparked a conversation with the head monk who personally showed us around – who also happened to live in Germany for a few years.

He invited me to come back and stay there. If I’m able to spare some free time, I am sure this would be a unique experience.

Q: What do you miss in Sri Lanka most?

A: I don’t miss much being in Sri Lanka thus far. I love Sri Lankan food and don’t find any issues in coordinating with my teams and their efficiency and teamworking skills have been great. I love Kalpitiya, especially the lagoon which I visit to engage in water sports. Closer to our Nestlé Lanka office, I love the water sports activities offered at Port City Colombo.

I would say Sri Lanka is an easy and lovely place to live in.

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