Nestle sees Russia as growth engine for Europe

By Maria Kiselyova

MOSCOW, March 26 (Reuters) - Nestle (NESN.VX: Quote, Profile, Research) sees Russia as its growth engine in Europe, a senior company executive said on Wednesday, suggesting inflationary pressure in the country is mitigated by escalating purchasing power.

Russia's inflation hit 11.9 percent last year, overshooting target by nearly three percentage points. But consumption in the oil-rich country was relatively unscathed, helped by double-digit growth in real disposable incomes.

"In Russia, last year was another successful year for Nestle. Sales accelerated ... in line with projections that we have made about a year ago," Bernard Meunier, head of Nestle Russia, told reporters.

The world's largest food company, which produces Nescafe coffee and Kit-Kat chocolate bars, plans to increase Russian sales up to $1.9 billion this year from $1.6 billion in 2007. Its worldwide sales stood at around $130 billion last year.

"Our ambition over all countries of the region is to be the engine growth for Europe for Nestle and a centre of confidence within the group," Meunier said, referring to the region of Russia, Belarus and some Central Asian states.

Nestle, which will have invested around $700 million in Russia at the end of this year, is already the largest producer of coffee, chocolate bars and baby food in Russia.

Last year, it acquired the Ruzskaya Confectionary Factory and cereal producer Bystrov. Meunier said Nestle was unlikely to make new acquisitions in Russia.

"We have made two acquisitions in the past year, so our plate is full. I do not think that the priority today is to actively seek another acquisition but rather to successfully integrate those acquisitions we have made," he said.