The Hindu Business Line : Nestle India withdraws three products from market

NESTLE India has decided to withdraw three of its products from the market. These are Nestlé Chocostick, Nestlé Butter, and Dust Tea, which have been discontinued from the market on the grounds that "they do not add value to the Nestle India portfolio."

These announcements were made by Mr Martial Rolland, Chairman and Managing Director of Nestlé India, and Mr Shobinder Duggal, Director (Finance and Control), at a meet for financial analysts to review the company's performance in the first nine months of 2005.

The company's growth in most categories was claimed to be satisfactory.

Nestle witnessed a volume growth for milk products and nutrition at 4.2 per cent; prepared dishes and cooking aids at 7.5 per cent; and chocolates and confectionery at 14.8 per cent.

The exception was the beverages category, which declined by 0.2 per cent. Sales in the segment were negatively impacted mainly by lower coffee exports to Russia and discontinuation of the dust tea business in India.

Mr Rolland reaffirmed the trust of the company in the areas of nutrition and health and wellness. "Having been part of the fabric of India for so many years, we have developed a strong consumer intimacy based on quality and trust. We have recently realigned some of the internal structures to become a multi focal company and our `7 Value Driver' model will keep us on track for long-term, sustainable, and profitable growth."

The company stated that its initiatives to balance the exports portfolio are delivering results with the percentage of exports to markets other than Russia increasing to 54 per cent of exports, compared to 49 per cent in the comparable period of 2004.

Further, advertising and sales promotion expenses during the nine months of 2005 were lower than the comparable period last year.

They are expected to go up from the levels seen in the nine-month period ended September 2005.

Meanwhile, the company has laid the foundation stone for its factory in Pantnagar. The plant is expected to go into commercial production in the second half of 2006.

Butter sector may see shakeout

SOON on the heels of Nestle India exiting the butter segment, a further shakeout may be on the cards with at least one other player likely to follow suit.

Industry officials said that the current volumes being generated by various companies operating in the segment, apart from market leader Amul, are not sufficient enough to compete profitably.

"Any dairy firm can manufacture butter. The trouble, however, is that the actual volumes are not sufficient to justify the investments made in the cold chain. Furthermore, apart from Amul, most companies do not have a distribution network outside of the major metros," an industry official said.

Currently, Amul has 88 per cent market share in the approximately Rs 600-crore butter segment. Amul is taking initiatives to expand it share and plans to come up with smaller size packs in the segment.

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