Nestle India to focus on adding more premium products to its portfolio

Nestle India will focus on adding more premium products to its portfolio even as it stays on track with its Rurban (rural + urban) strategy, which is to increase its distribution reach.

“As part of our part of premiumisation and upgradation, we are working on 30-35 projects and at least 5 to 10 of these will be coming through in the next couple of quarters,” Suresh Narayanan, chairman and managing director of Nestle India said at a press conference.

“We just have to stagger it (launches) and what is important for us always is not only the excellence of the product, but also excellence in execution,” he added.

During the quarter, the company’s net sales stood at Rs 4,619.5 crore, up 15 per cent in the second quarter of the financial year (it follows the January-December financial year) compared to the same quarter last year.

He told reporters that its volume growth during the quarter came in at 4-5 per cent and asserted that some of the low price-point packs saw an impact but added that demand is now coming back.

Nestle India has also seen that the value-added part of its portfolio has been growing well.

“I think the over emphasis on short-term volume swings should not get read more than it should be, because what is important for building brand equity and brand trust are transactions over a period of time,” Narayanan said.

The company saw growth not just in mega cities and metros but also from tier 1 to tier 6 towns.

“In rural India, the growth has been strong, our base is relatively low at about 20 per cent But, it's not small, it is still a fairly large business,” Narayanan said.

The company also saw its market shares remain steady or have improved. In coffee, the company has seen a significant improvement in market share, its market share in chocolates has improved on a quarter-on-quarter basis. 

Narayanan pointed out that its market-share in noodles, which was flat for some time due to the price increases, has also started to improve.

Food inflation remains a matter of concern, he said.

“While the so-called headline inflation has been very much in control, food inflation will continue to wobble for a while, not just because of expectations on crops but also climate change,” he said. 

He added that the kind of torrential rains that are taking place, the impact this could have on the winter crops, is anybody’s guess.

“I would still say, the spectre of food inflation is going to remain. It’s not something that we can wish away that quickly. Fortunately, for us, fuel and packaging costs are fairly under control today,” he said.

In the first half of this year, the maker of Kitkat and Maggi combated roughly about 10 per cent inflation. The same last year inflation was about 15 to 20 per cent, he said.

The company announced that it will be opening its tenth factory in Odisha and it will invest roughly Rs 900 crore in the same. The factory will focus on noodles, with chocolates and confectionaries also part of it. From 2020 to 2023, it has invested Rs 2,100 crore and will invest Rs 4,200 crore between 2023 to 2025 which will also include the Rs 900 crore in the Odisha factory.
 

Nestle investments
 
From 2020 to 2023 HY: Rs 2,100 crore
 
Between 2023- 2025: Plans to invest Rs 4,200 crore (including a new factory  in Odisha for roughly Rs 900 crore)