India presents Rs 7,500 cr premiumisation opportunity for Nestle: CMD

Hopes tax benefits in Budget 2025 will spur consumption, sales

Fast-moving consumer goods (FMCG) major Nestle India on Tuesday said that with sustained economic growth in the country and increasing consumption of packaged foods, India presents a Rs 7,500 crore premiumisation opportunity.

 

In a call with analysts, Suresh Narayanan, chairman and managing director, said premium products in each category have been outpacing the overall category growth, adding the trend is visible across urban and rural markets.

 

The company’s premium portfolio has registered a compounded annual growth rate (CAGR) of 16 per cent since 2015.

 

It will drive market share gains by continuing premiumising the core categories and products, he added.

 

 

Narayanan added that the announcements related to tax benefits made in the Union Budget will give a fillip to sales of packaged food companies, and spur consumption in the country.

 

“While some money from the Rs 1 lakh crore will go towards savings and shedding the EMI burden, I hope part of it will come into consumption and give us a fillip,” Narayanan told investors.

 

Narayanan, however, pointed out challenges like rising food inflation and a slowdown in urban consumption, alongside a shift in consumption patterns like rising health consciousness.

 

Commodities like milk, coffee, and cocoa have seen a high rate of inflation, thus prompting the company to take moderate price hikes last year. Factors like urban unemployment, slow real wage growth, and a post-Covid moderation have impacted demand from urban markets.

 

Narayanan added that the company will undertake price increases in categories like coffee. 

 

The maker of Kitkat chocolate and Maggi noodles reported a 4.9 per cent year-on-year increase in net profits to Rs 688 crore in the third quarter of FY25, and a 3.9 per cent hike in the net sales to Rs 4,779.7 crore from Rs 4,600.4 crore in the year-ago period.