Nestle India on Wednesday said that inorganic growth opportunities remain an “area of interest” for the company. In the period 2018-22, the packaged food major recorded volume growth at a CAGR of about 7 per cent and value growth at a CAGR of 11 per cent.

In an investor meet, Suresh Narayanan, Chairman & Managing Director, Nestle India, said: “M&As (mergers and acquisitions) continue to be an area of interest. So far, we have focused on 100 per cent organic growth. So, I think our quest for acquisitions continues. But it will need to meet our criteria in terms of the right fit, capability to add value and valuations. Our eyes and ears are open and hopefully something will come up in the future.”

Speculations had been rife in the past of Nestle evaluating acquisition targets, including Ching’s Secret.

Asked if the company is expected to see higher volume growth in the coming years, Narayanan said, “The company’s philosophy is unlikely to change in terms of maintaining balance between growth and profitability. I think in the future I would like us to grow faster than 7 per cent...it’s not an impossibility. But launching products or getting into categories that are deeply dilutive to margins will not really be our focus. The company’s roadmap in terms of creating infrastructure and ecosystem is to target higher growth.”

In terms of investments, the company is in the process of investing about ₹5,000 crore till 2025 which will include investments in setting up the company’s 10th factory in Odisha.

The company added that it has been sharply focusing on growing its presence in the “rurban” regions by more than doubling the distribution points, increasing sales team on the ground, in-store visibility and HAAT activations. At the end of September, the company said its distribution reach stood at 5.2 million outlets including direct reach to about 1.6 million outlets. By 2024, it aims to grow its rural distribution reach to 1.2 lakh villages with a population of over 20,000 population.

Responding to a query on premiumisation, Naryanan said, “The growth rate of premium products in the company is atleast 2-2.5x of the rest of the portfolio. Premiumisation trends are also visible in small town India.”

On looming challenges, he added that prices of certain commodities such as green coffee are cause of concern. He said that though packaging costs are stable but uncertainties in the Middle East and its impact on oil prices remain.

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