Nestlé bullish about volume-led growth in spite of subdued demand scenario: CMD Suresh Narayanan

Amid faltering demand and steep inflation, impacting margins, the country’s largest foods company Nestle India is betting heavily on its innovative products pipeline and growing penetration for growth. As the fast-moving consumer goods market suffers from poor volume offtake, the F&B major is accelerating its pace of increasing reach, a top executive said.

“In line with our strategy, we continue to remain focused on penetration-led volume growth. In the last seven years, we have delivered industry leading volume growth. The portfolio of the company is very strong and we enjoy leadership positions in many categories despite the storm in 2022,” Suresh Narayanan, Chairman & Managing Director, Nestle India told Business Today in an exclusive interaction.

According to him, the pace of innovation in Nestle remains intact inspite of macroeconomic headwinds of late. Incidentally, since emerging from the Maggi crisis in 2016, Nestle India has introduced at least 100 new products across categories and ventured into newer areas like breakfast cereals and expanded its presence significantly in ready-to-eat, ready-to-cook and nutritious drinks segments.

The struggle with faltering volume growth is relatively new for Nestle. While most leading FMCG companies have reported low single digit volume offtake for nearly four quarters, Nestle’s volume growth remained in the high single digit zone. In the October-December quarter, however, its volume growth slipped.

To ramp up its growth journey, Narayanan says that Nestle is increasing its rural reach to serve greater number of consumers, which will help it mitigate the risks of subdued volume intake amid steep inflation. Earlier it had set a target of serving any village with over 2,000 population - comprising of 120,000 villages.

To back it up, the company will invest Rs 5,000 crore as capital expenditure - mainly to expand its existing 9 plants over the next three years. The company has recently initiated operations at its ninth plant - primarily dedicated to brand Maggi - at Sanand, Gujarat.

“For us, the metros and tier-1 towns are growing fairly and so are rural areas. But it is the mid-size towns - tier-II to tier-V that have shown stress off late. But once things normalise, I am confident that we will be well-positioned to take advantage of the growth,” said Narayanan.

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