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Nestle India to adopt regional cluster strategy to boost volume

Meenakshi Verma Ambwani New Delhi | Updated on February 26, 2018

Virtual teams set up to develop tailor-made brand, marketing and distribution strategies

In a bid to sharpen its focus on volume-led growth and increase penetration of its products, Nestle India will be adopting a regional cluster-based approach to develop tailor-made brand, marketing and distribution strategies to address the needs of consumers in specific geographies.

Suresh Narayanan, Chairman and Managing Director, said: “One of the core strategies that we have articulated in the company is that there are Many Indias within India. So we are evolving our organisational structure to divide the country into 10-15 regional clusters.”

“We have set up virtual teams, who will be responsible for tailor-made strategies for brands, distribution, channel strategy, marketing and promotion that will be relevant to these regions. The whole purpose is to empower the people at the appropriate level of the organisation for quicker execution of plans.”

Each of these virtual teams will consist of members from various departments such as sales, supply chain, customer management, and marketing.

“We will focus on this strategy in the coming months to support the volume-led growth platform. This will also expand our scope beyond the top 100 towns. While the top 100 towns will continue to be the major contributors for our sales, this strategy will help us prepare to reach the next 300-400 towns in the future,” he added.

Regional variants

The company could also explore opportunities to launch regional variants of its products in categories such as sauces, coffee and confectionery.

“If in the short to medium term, a regional variant can contribute 3-5 per cent to the brand sales, it will be viable to launch that regional variant,” he added.

Nestle India, which has launched nearly 40 products in the past 12-15 months, might look at retweaking or discontinuing about 10-15 per cent of these launches, even as it will continue to focus on launching new products across categories.

It has recently launched products for special dietary needs and protein supplements. Nestle, which recently entered the pet care segment in India, will also continue to look at foraying in new categories such as premium coffee and snacks.

It will also dial up its fortification strategy of infusing its products with essential micro-nutrients across categories, besides continuing to look at ways to reduce salt and sugar levels in its products.

Nestle India crossed the ₹10,000-crore mark in revenues in 2017. While Maggi contributed about 35 per cent to the company’s reported growth in 2017, 25 per cent of the growth came from new launches.

“We are really getting more broad-based which is the appropriate representation of Nestle as a multi-product and multi-category company,” Narayanan added.

Asked about expectations for this year, he said, “Our ambition is to have a double-digit growth. But, GST could have after-effects and if I get a good mid to high single digit growth also I would be happy with it,” he added.

Published on February 26, 2018

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