Economy

Nestle India sees growth in FMCG segment slowing to single digit

Meenakshi Verma Ambwani Chennai | Updated on August 19, 2019 Published on August 19, 2019

Suresh Narayanan, Chairman and MD, Nestle India

Low-budget and daily use items save the day for sector

Nestle India believes though the FMCG industry has been witnessing a muted growth rate in the past few quarters, it is unlikely to see the negative growth trajectory as seen in the automobile sector. The company proposes to intensify its focus on volume-led growth to increase penetration of its products in Tier-2 and -3 towns.

This will be done with relevant marketing and ad spends to grow its brands in the challenging economic environment, the company said.

Speaking at a media roundtable, Suresh Narayanan, Chairman and Managing Director, Nestle India, said, “The overall FMCG industry growth has been going southwards. But the kind of issues other sectors, like automobiles, is facing may not get necessarily replicated in this sector because it offers essential low- budget items that are important for daily consumption. Growth may come down from modest double digits to decent single digit but it will not be in the negative territory.”

Nestle India has recorded 10 consecutive quarters of value growth. The company said it will continue to focus on bringing in new innovations as well as strengthening distribution in rural regions. “We have direct distribution in over 52,000 villages and we plan to double this in the next 2-3 years,” he added.

Since 2016, the Swiss major has launched nearly 61 innovations in India. New products contributed to nearly 3.7 per cent to the company’s domestic sales in the first half of this year. After launching its malt beverage brand Milo in ready-to-drink format, the company is next launching it in the powder format. The brand will now be directly competing with other key health food drink brands such as Horlicks and Boost.

“Globally, Milo is the number one cocoa-malt beverage. We felt the time was right to bring it in the powder format in India. It will initially be launched in the Southern States and then we will look at rolling it out to other parts of the country,” Narayanan said. For now, the product is being imported from Singapore but has been specifically tailored for the Indian consumers.

Asked whether the company will increase prices, Narayanan said that for now the company is looking to mitigate the impact of rising costs of commodities. “Since our core strategy is penetration-led volume growth, we will try to hold on to the price points. But if commodity prices continue to rise, we may have to look selective prices hikes. Some price hike has already been done in the milk and nutrition category,” he added.

 

The reporter was in Chennai at the invitation of Nestle India

Published on August 19, 2019

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