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Tuesday, Dec. 3, 2002

BEYOND COFFEE

Nestle looks to broaden appeal via health products


Staff writer

OSAKA -- Nestle Japan Holding Ltd. is preparing to move beyond its mainstay of coffee to offer a more diversified product line, according to the head of the company.

News photo
Shunichi Fujii

"We aim to become a provider of not just coffee but nutritional products, especially for those who are very physically active as well as those who are elderly with special dietary requirements," Shunichi Fujii, chief executive officer and president of Nestle Japan, said in a recent interview with The Japan Times.

To that extent, Nestle Japan has used the 50-50 joint venture it formed with Snow Brand in February 2001 to create products aimed at promoting a healthy lifestyle. Its first product, LC1 yogurt, hit the market earlier this year, and the firm said more products will soon follow.

And in April, it began selling PowerBar, which is packed with energy and nutrients, at nearly 400 sports clubs, outdoor shops and bicycle shops nationwide.

The joint venture was created after Snow Brand suffered a loss in consumer confidence in the wake of a widespread food-poisoning outbreak linked to its products in summer 2000.

There had been speculation that Nestle Japan might completely take over Snow Brand, but that was not the company's intention, Fujii said.

"We use Snow Brand's strength in sales and production in Japan, with Nestle's food safety, quality system knowhow," he said, ruling out that his firm is interested in merging with or acquiring Snow Brand.

Meanwhile, Nestle Japan has also had to deal with its own round of negative publicity.

Earlier this year, it was revealed that the company was recycling unsold instant coffee. The company also had to deal with a lawsuit filed by Japanese coffee maker UCC.

But Fujii said this did not have a negative impact on sales. Nestle Japan posted more than 300 billion yen in sales and raked in 17 billion yen in profit in its business year that ended last Dec. 31.

"There has been no provable negative impact on sales because of that issue," he said.

Nestle's practice, which came to light in the spring, involved taking coffee that had not been sold within three years of its production date and mixing it with hot water and coffee bean extract to make new coffee powder.

Nestle Japan had not informed its customers that the coffee powder they were buying was made from old coffee.

The process simply involved "reworking" and "not recycling," Fujii said. It has been a long-standing practice that has its roots in the company's concern for the environment, he said.

"Our policy for reworking is based on the idea of producing environmentally friendly products, and to reduce waste and byproducts," he said. "When we explained to the public why we were reworking our coffee products, we received more positive than negative feedback."

The revelation came around the time that UCC Ueshima Coffee Co. filed a 5.2 billion yen lawsuit against seven subsidiaries of Nestle Japan, claiming they had violated a contract when they stopped payment to UCC last December for coffee provided to Nestle-operated vending machines.

Fujii refused to comment on the case, saying only that it is in arbitration and that there are no signs of a quick settlement.



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The Japan Times

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