Nestle says RURBAN strategy and new product innovation to fuel growth
Continuing with its RURBAN focus, FMCG giant Nestle India on Wednesday said penetration-led volume growth, along with increased focus on digitisation, will be the key to its growth strategy.
“We intend to sell more and sell wider. India is the fastest growing market for us, with an addressable 487 million consumers. We intend to take this to 700 million by 2030,” Suresh Narayanan, CMD, Nestle India, said during its analyst and institutional investor meet.
For this, the company said it will rely on brand salience, product innovation and strong cost efficiency management.
He said the packaged food consumption in India was still low as compared to China or the Philippines, which was 4.2x and 3.3x higher than the Indian market respectively.
The maker of Maggi and Kit-kat said it is setting up its 10th factory in Odisha to be “future ready”. It said it will invest Rs 800-900 crore on setting up the food processing factory.
Reiterating its RURBAN strategy, where the company plans to remain focused on deepening its reach in under-penetrated small towns and large villages, Narayanan said the RURBAN journey is a logical one, with strengthened distribution checkpoints and increased in-shop visibility.
The company said its distribution touch points had reached 8013 for Jan-September 2023.
“There is a secular and strong growth in rural India, with a three-year CAGR of 26.6%,” he said. Premiumisation of products continues to drive the business in urban area.
The company said it had launched 125 new products in the last seven years’ contribution to about 6% of sales. “We have 10 new products in the pipeline and hope to launch by next year,” he said.
Last week, Nestle India had announced its quarterly results. The company’s consolidated net profit increased by 37.28 % y-o-y to Rs 908.08 crore for the quarter ended September 30, 2023. The net profit for the quarter includes one-time gain of Rs106.4 crore. The revenue from operations stood at Rs 5,036.82 crore, up 9.45% y-o-y for the quarter.
The company said its domestic sales increased by 10.3% y-oy, supported by prudent pricing and volume growth. Nestle said it has crossed turnover of Rs 5,000 crore, a first for the company in any quarter.
Meanwhile, Nestle India said as a part of its sustainability initiatives, its plans to be coal free manufacturing by 2024 and fossil fuel free by mid-2025.
On the commodity outlook, it said that uneven rain and rain deficit is expected to impact production of maize, sugar, oilseeds and spices and that may have an adverse impact on pricing. Narayanan also said that coffee continues to be volatile because of global supply deficit.
