Nestle India CMD Suresh Narayanan on Monday said 2022 will be a difficult year as commodity inflation pressures are anticipated to worsen.
“Going forward, 2022 clearly looks to be a difficult year,” Mr Narayanan told the media.
“ There is an uptick as far as milk prices are concerned. The disruption of the pandemic and the non-replacement of the milch herd across the country has really led to a depleted supply base,” he said. “There is going to be an escalation as far as milk prices are concerned.”
He added that globally coffee prices are also rising quite significantly with Vietnam, the largest grower of the commodity, reeling under adverse effects of the pandemic.
“So, there is going to be the spectre of food inflation that will be staring at us...this is an area that we are watching out for,” he said, adding the silver lining for India is that Rabi crop is likely to be good after a fairly-robust monsoons, helping mitigate some of the inflationary pressures.
“Nevertheless, it is going to be something that we have to factor in as far as the coming months and the coming quarters are concerned,” he added.
To a query, Mr. Narayanan added that Nestle India has raised prices in the range of 1.3% till now due to raw-material price pressures, and added that with the larger economies opening up quite strongly, there would be a pressure on raw materials going forward.
“So, I think the forward pressures are likely to be more acute than what we have been through at the moment”.
He also said that the company had submitted its proposal for the Centre’s Production-Linked Incentive (PLI) scheme for the food processing sector. He, however, did not share the details.
Talking about festive demand, he added that there were mixed signals from the market. “It is not that there is a unleashing of exuberance that is happening. The last festive season was kind of muted for many of the players. There is a strong expectation that this Diwali will be definitely much better than the last Diwali. I do see a better outlook but honestly, we will have to wait a few more quarters to really be sure that this is sustainable demand that is here to stay and not some last vestiges of pent-up demand.”
The company would be amplifying some of its new introductions during the festive time, while also bringing in new products in the coffee, confectionery as well as food space, he added.
