Leading food and beverages company Nestle India is hopeful of tackling the general economic slowdown being faced by several sectors, said a top official.
“From a modest double-digit growth, we are expecting a decent single-digit growth for the current year,” said Suresh Narayanan, chairman and managing director, Nestle India Ltd.
Price hikes
“Yes, the situation is bad. But it is not like other sectors. There could be some selective price hikes,” he said.
According to him, currently Nestle India was in a better position than other companies as it had reported positive growth. It was due to factors such as lower levels of penetration of the category in which it operated, lower rural play and introduction of innovation and renovation in products.
In tier-II and tier- III towns, Nestle registered double-digit growth in the June quarter of 2019.
Asserting that the downturn provided a greater opportunity for a company to engage and connect with customers and to improve the salient features of a brand, he said that next year, the firm would increase its advertisement and marketing spending and investments in new products.
Besides, it would also double its rural play from the present 52,000 villages over the next two-three years. “Commodity prices have gone northwards in the case of milk and wheat. We are trying to mitigate it. During the first half of the year, the commodity prices increased by 200 basis points, we absorbed 160 basis points,” he said.
Nestle launched 61 new products in the last three years of which 70% were successful. The rest of them needed recalibration, he added.
Nestle would invest ₹700 crore in the first two phases for setting up its ninth Maggi noodles unit at Sanand in Gujarat. It would provide direct employment to 400 people of which 50% would be women. The unit would go on stream over the next 18-24 months.
The firm was also evaluating the option of investing in chocolate and confectionery. On Monday, the company announced its entry into the ₹8,000-crore cocoa-malt-based products, with the launch of Milo.
Imported from Singapore, it would be initially available in the south. The product would be test-marketed for six months.
“We will think of producing it here once the volume touches 2,000 tonnes,” he said.
“Going forward, e-commerce would be a focus area for Nestle. It had opened up new avenues for us. The volumes had trebled to 1.5% of total sales,” he said..
