Nestle India to enter petcare, water, coffee machine segments

In a bid to pass on the benefits of GST to consumers, Nestle India has reduced the prices of its milk products by 8 per cent and cereals and sauces by 1-2 per cent. The company disclosed this at its analyst meet last week.

The company, at the meet, also indicated that it is evaluating an entry into categories such as petcare and water in India.

An analyst report by Edelweiss Securities stated: “Changes in GST rates for Nestle has been a mixed bag, with rates increasing in categories like confectionery and coffee, while reducing for dairy and infant cereals. Nestle has taken the required price cuts wherever it has gained from rate reduction; however, price hikes have yet to be taken. Nestle has announced 8 per cent price cut in milk, and 1-2 per cent in cereals and sauces.”

Meanwhile, an analyst report by Motilal Oswal stated: “Price increases could not be taken because of weak environment and competition. The (Nestle) management is looking for price increases in a couple of months, if the environment becomes favourable.”

The FMCG major has also been on a product launch spree since last year. It told analysts that between January 2016 and May 2017, it launched 43 new products across various segments, and plans to continue with this strategy.

“The company will be devoting resources towards products that have the potential to emerge winners on both national and regional scale…As for venturing into new categories, Nestle India would enter categories with global presence...

“Key global categories for Nestle like water, coffee machine and petcare are being evaluated for launch in India,” the Edelweiss Securities’ analyst report added.

Elaborating on the process of transition to GST regime, the company said it conducted awareness programmes for over 3,500 suppliers and 1,600 distributors.

While sales and billing started from day one of GST implementation, its distributors migrated successfully to start sales by July 3, the company added.

Nestle also said it expects to resolve other operating issues over time.