Nestle India to strengthen ‘rural play’, optimistic on festival season sales

Meenakshi Verma Ambwani Ludhiana | Updated on September 30, 2019

FMCG major Nestle India believes that while the ongoing festival season is expected to be positive for consumer goods companies, the next six months will be crucial for a steady revival in consumption.

The company also said that the government’s recent move to slash corporate taxes was a step in the right direction. It is looking to further bolster its presence in rural markets.

Replying to a query on the ongoing festival season, Suresh Narayanan, Chairman and Managing Director, Nestle India said, “Consumer goods companies are looking forward to the festival season as they are expected to see a bump in demand. But for me, what needs to be seen is the short- to medium-term and how the next six months evolve.”

Stating that there are no short-term fixes for the ongoing slowdown, Narayanan added, “I have no reason to believe that the season will not be a good one but this alone will not be an answer to the long-term secular issues of consumption that seems to be foremost in the minds of most people in the industry.”

In July, market research firm Nielsen had cut its growth forecast for the sector to 9-10 per cent in 2019 from the previous forecast of 11-12 per cent.

Narayanan was addressing a media roundtable to commemorate ten years of Nestle Healthy Kids Programme, an initiative that focusses on raising health and wellness awareness.

Narayanan said, “Corporate tax reduction is expected to translate into better earnings for companies which will hopefully translate into better dividends putting extra cash in the hands of shareholders. This is expected to have a positive impact on consumption.”

The company believes that above average monsoons in 2019 could reduce growing pressures of high commodities prices.

Narayanan said that Nestle India currently draws about 25 per cent of sales from rural markets. It expects rural contribution to increase to about 30-35 per cent in the next 2-3 years. It will strengthen its rural play by launching low priced packs and rural-focussed innovations.

(The writer was in Ludhiana at the invitation of Nestle India)

Published on September 30, 2019

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