Nestle to double spend in India to Rs 600 crore

FMCG major Nestlé SA is all set to double its investment in India to Rs 600 crore next year on the back of strong growth it witnessed here in 2007. "We will be doubling our investments in India next year. There is no envelope to the number as long as it is strategically and economically sound investment," Peter Brabeck-Letmathe, chairman of Nestlé SA, said.

At present, Nestle India contributes around 1.5 per cent to the total turnover of the company. "Nestle India registered 25 per cent growth in the first half of this year," Martial Rolland, chairman & managing director of Nestle India, said. The company will continue to grow from being an agri-based to a nutrition, health and wellness company with a focus on regionalising products.

While the rising commodity prices have been a cause of worry globally, Nestle feels that it is well placed to cope with commodity price-driven pressures for the remaining year and most part of 2009. "We as a company have been able to cope with the pressure, so there won't be an impact on the results," Brabeck-Letmathe added.

He added that given its worldwide operations, the company had pre-empted price increase in commodities and managed to cope better with accelerated cost efficiencies rather than passing on the entire burden to the consumers.

With regards to developing distribution channels, Rolland added that the traditional retail channel would continue to remain the mainstay of the company's sales strategy. While modern trade does have benefits of better visibility and value-added services, he believes it will take a long time to overtake traditional retail.

Identifying out-of-home consumption as an opportunity for growth, Frits van Dijk, executive vice-president, Zone AOA & West Asia, said, "There is great potential in providing beverage solutions in shopping malls, restaurants."

As a part of its special marketing initiative to serve the needs of the price-sensitive consumers in India, Nestle has dedicated its Uttarakhand plant for designing, formulating and packaging products under Rs 10 price point. Identifying the huge growth potential in developing markets, Paul Bulcke, CEO of Nestlé SA, said that the developing markets currently accounting for one-third of its business would grow significantly. The company also sees the recent Chinese milk scare as an opportunity to provide safer options for consumers rather than a threat to its sales.