Nestle expects organic growth to drive business in India

Meenakshi Verma Ambwani Vevey (Switzerland) | Updated on November 21, 2018 Published on November 20, 2018

The headquarters of food giant Nestle.   -  Reuters

Open to prudent inorganic growth opportunities, says CEO Schneider

Fod and beverages major Nestle believes the next phase of growth for its Indian business, which crossed the ₹10,000-crore mark in revenue in 2017, will continue to come from organic growth even as it is open to pursue “prudent and meaningful” inorganic growth opportunities.

With GlaxoSmithKline putting its nutrition business portfolio including health drink brand Horlicks on the block earlier this year, Nestle is widely speculated to be among the frontrunners for the acquisition. However, the company declined to make any comments on the issue.

Speaking at a global media roundtable, Mark Schneider, CEO, Nestle said: “ I am very pleased with how our Indian company has developed. It has showcased strong leadership and very nice organic growth. Going forward, as everywhere else, we are interested in strong organic growth — that to us is the lifeblood of a successful company. It is important to understand that organic growth is more than just the company’s success as it also tells you how much the company is in favour with the customers. Hence, we are dedicated to strong organic growth.”

Replying to a query on potential acquisitions, he said: “ We have been pursuing acquisitions everywhere over the years and that is part of our business model as a growing company to gain additional market presence. So when there are prudent and meaningful opportunities, we are interested in those. But we cannot comment on anything specific.”

The company, whose Indian business has made a sharp recovery since it was hit by the 2015 Maggi crisis, believes that working closely with local governments and customers and being nimble in addressing any concerns about products, in this era of social media, have been the key learnings from the crisis.

Recounting the Maggi crisis, Schneider said that there was a wave of sentiment building against the product which hurt the company strongly at that time. “So, as much as you want to be absolutely sure that what you say to the last degree is true and reliable, you also have to be very fast.” He added: “One of the reasons the company recovered quickly was because the product (Maggi noodles) was found to be right.”

Going healthy

In line with its growing focus on nutrition and wellness, the Swiss major has been sharply focussing on renovating its product portfolio at a global level. It kickstarted its ‘Nestlé for Healthier Kids’ programme this year, and aims to help 50 million children lead healthier lives by 2030. This will be done through a slew of measures such as reformulating products, introducing new product innovations, and educating parents and caregivers.

The company said the programme will help accelerate the nutritional transformation of more than one-third of its product portfolio globally. The firm will further reduce salt, sugar and saturated fat levels in its products and focus on adding ingredients such as fibre-rich grains and vegetables.

Meanwhile, Nestle is also betting big on the e-commerce channel globally. Schneider said the company is seeing the contribution of online sales rising across categories. “We are committed to a strong presence on the online channel. Our online sales are growing about three times faster than offline sales. Currently 7-8 per cent of our total revenues globally comes from the online channel. We work closely with major online retailers and ensure our products are optimised for their needs.”

Since 2016, Nestle India has been focussing on an aggressive growth path with the introduction of 25 new product innovations. Brand Maggi, too, has made a strong recovery, and its current market share is pegged at 60 per cent in the instant noodles segment.

The writer is in Vevey at the invitation of Nestlé.

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Published on November 20, 2018
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