We don't see rolling back of prices as an imminent issue: Nestle India

The company is also increasing its advertising and promotional spends, particularly digital spends

Nestlé India has no plan to slash product prices in the near future as key commodity prices remain high. 

“We don't see rolling back of prices as an imminent issue,” Suresh Narayanan, chairman and managing director of Nestlé India, told investors on Wednesday, responding to a question about price hikes that the company had taken in previous quarters. “Although inflation has come down, commodity prices including that of wheat and milk are still high.” 

Narayanan noted pricing adjustments had impacted almost half of Nestlé India portfolio.

The maker of Maggi noodles and Kitkat chocolates had on October 19 reported a 37.28 per cent year-on-year (Y-o-Y) rise in its net profit at Rs 908.08 crore for the third quarter of 2023. Net sales also saw a rise of 9.4 per cent Y-o-Y to Rs 5,009.5 crore.

The company is increasing its advertising and promotional (A&P) spends, particularly on digital platforms. The company's A&P expenditure has grown 1.3 times in the first nine months of 2023.

It is also doubling down on innovation and has recently expanded its ready-to-eat line with the introduction of bajra-based millet snacks in the Rs 100 crore a+ brand. “We’ve launched over 125 new products in the past seven years,” said Narayanan, adding that 10 new projects are in the near-term pipeline.

Narayanan said while innovations contribute to over 6 per cent of sales, the long-term objective is to take this contribution up to 10 per cent.

 The company is also stepping on the accelerator on e-commerce channels. Its e-commerce channel, which grew 20 per cent in the first nine months of 2023 over the year-ago period, accounted for 6.6 per cent of sales this year until September.

 Narayanan said that the company’s addressable consumers currently stands at 487 million, consisting mainly of the middle class. He further said this number is expected to grow to 700 million by 2030, on the back of a new consumer cohort comprising millennials and Gen-Z.

 With 1.2 billion mobile users and 470 million Gen-Z consumers, “it is the rise of new India”, said Narayanan, adding that “the rise in infrastructure has also had a tangible impact on Nestle India’s rurban (rural+urban) strategy.”

He further said the company’s thrust on premiumisation will continue.

In volume terms, the company has recorded a compound annual growth rate of 6.7 per cent from 2018 to 2022. “Our focus is on penetration-led volume growth,” Narayanan concluded.