Nestle India relied more on railways, water routes in 2021: Report

Nestle India focused on alternative modes of transportation such as railways, waterways and also optimised its vehicle fill rate to ensure sustainable logistics across its value chain, the company said in its annual report.
 

Nestle increased the use of bigger size vehicles from 5.9 per cent in 2019 to 9.8 per cent in 2021 and started using railways, which was not used in 2019. It also introduced four waterways in 2021.
 

Under the category of finished goods handling, transport and distribution in 2021, the company’s cost went up by 19.6 per cent to Rs 694.35 crore.
 

The Switzerland-headquartered consumer company also augmented a co-manufacturing strategy to enable speed to the market and accelerated the paperless invoicing platform to address short-term disruptions due to the pandemic.
 

Nestle shifted to a shorter-planning horizon, focused on priority stock-keeping unit and channel-wise planning. It upscaled the transport control tower to enhance stock and transit visibility, the company told shareholders in its annual report.
 

Nestle India’s annual report also stated that commodity rates soared in 2021 with prices of several commodities reaching all-time highs.
 

“Global energy prices surged in the second half of 2021, particularly for natural gas and coal, owing to recovering demand and constrained supply. Non-energy commodity prices stabilised. Global inflation increased to 5.2 per cent in 2021, because of persistent supply chain bottlenecks and rising freight costs, impacting global production and trade, pushing up prices of essential goods,” the company said in its annual report.
 

It also said food prices shot up by 22 per cent in 2021, reaching the highest levels in a decade with sharp increases in vegetable oils, cereals and dairy prices.
 

The company also said that the price outlook for key categories like edible oils, coffee and wheat, remained firm to bullish. Also, the cost of packaging material continued to increase amid supply constraints, rising fuel and transportation.
 

The company gave its guidance on global economic recovery and said, “The pace of global economic recovery is expected to be slow in the near term as recurring pandemic waves disrupt economic activity. Recovery is also at risk from more persistent supply disruptions, inflationary pressure, financial stress and climate-related issues.”
 

It added, “As the world confronts the pandemic, the climate emergency and its economic impact are also gaining sharper focus.”
 

On the Indian demand scenario, the company cited Reserve Bank of India’s (RBI’s) consumer confidence survey, which stated that the present situation suggests sustained uptick in consumer sentiment. It added, private consumption is poised to see stronger recovery with rapid coverage in vaccination and faster normalisation of economic activity.
 

Nestle India also pointed out that the food processing industry has strong growth potential. The pandemic has led to increased acceptance of processed food, Nestle India said, citing KPMG’s 2021 report.
 

Nestle also said rural areas and tier 2 and 3 cities are expected to drive demand for processed food. The company is also focused on increasing its rural penetration.
 

Suresh Narayanan, chairman and managing director of Nestle India, said in his statement to shareholders, “Your company is firmly and resolutely on a journey to unlock the potential of small towns through a customised portfolio, enhanced distribution infrastructure and deployment of resources, localised communication, enhanced visibility, and building consumer connect.”
 

Narayanan also said that the company’s continuous investment shows its confidence and trust in Nestlé’s journey in India. He also said the consumption story of India will be strengthened, moving forward.
 

“Aspirations are rapidly converging between urban and rural India, leading to an uptick in the consumption of branded goods with high quality, safety, and nutrition credentials,” Narayanan said.