Nestle considers 'minimum' price hike due to rise in commodity, oil prices

FMCG major Nestle India is considering a mild price hike "selectively in some categories" to offset rising prices of base raw materials such as wheat and milk, a top company official said.

Although Nestle is trying to mitigate cost by enhancing cost efficiencies on manufacturing, sales etc, it may go for a "minimum" increase as other inputs costs such as packaging are on the rise led by high crude oil price and falling Indian rupee against the US dollar.

Besides, Nestle India is also now gearing up for the "next wave of capacity expansion" after having a volume driven growth in last 18 months. The company is mulling expansion of its existing production facilities besides venturing into new locations.

"Yes, the exercise is on to look at next phase of capital expansion," said Nestle Chairman and Managing Director Suresh Narayanan.

He further said:" It's an active subject seeing the sustained performance."
"If there is a sustained impact on wheat, packaging material and possibly on milk going forward, it would affect quite a few categories in the company," he said adding "selectively in some categories, there could be some price increase."
However, on being asked about the quantum, Narayanan said: "It's not for me to speculate right away. We have bands which we follow to decide upon what extent we are able to mitigate price increase with other elements of cost efficiencies."
On being asked for the timing of increase, he said, "It is very difficult to specify the timings but all these are moving in tandem. We just have to see to the extent to which these pan out will determine the extent to which we will absorb it or not absorb it, it will determine the time."
Nestle India presently has eight manufacturing units at -- Choladi (Tamil Nadu), Nanjangud (Karnataka), Samalkha (Haryana), Ponda and Bicholim (Goa), Pantnagar (Uttarakhand)
In 2017, Nestle on a comparable basis, reported a domestic sales growth "estimated at 11.8 per cent due to increase in volumes including rebuild of Maggi Noodles."