Nestle announces foray in organic food category

World's largest food and beverage company Nestle India on Friday said that it has forayed into the organic food segment. This comes in line with the leading packaged food company's innovation strategy at bagging new consumer opportunities and to strengthen its food and nutrition portfolio.

The food and drink company will launch three products in the organic food category which comprises an organic variant of Ceregrow (Nestle's cereals brand for children).

"Overall from the FMCG industry perspective, there has been a rural slowdown, with issues due to credit flows in the market and aberrations with certain channels," said Suresh Narayanan, Chairman and Managing Director, Nestle India while addressing the media at a roundtable.

"But it's too early to say that it's a systemic issue and I believe the fundamental view on strong consumption led-growth cannot be dismissed", he added.

Narayanan further said that "Nestle has come out stronger as compared to its peers, in terms of volume growth in Q1 is due to the fact that about 25 per cent of the company's sales come from rural regions, while 75 per cent sales come from urban regions. The company has consistently maintained its urban growth rates."

However, Narayanan also stated that poor monsoon (below-than-normal levels) could impact rural demand and pose challenges for the industry. "If monsoons are going to be less-than-optimal, there would be a dampening effect as far as the rural demand is concerned. In terms of agro-commodities, the trend is clearly going upwards for raw materials such as milk and wheat. This will exacerbate if the monsoons are not as good as predicted", he emphasised.

He went on to say that the foray into organic food category is in line with the Nestle's focus on strengthening its food and nutrition portfolio.

"We are working with farms with expertise in organic farming capabilities in Rajasthan, Andhra Pradesh and Karnataka, to procure organic raw materials. Now that we have built expertise in terms of sourcing and procurement, we will look at expanding our organic food portfolio," said the CMD.

At a time when the FMCG industry has expressed its concerns about a slowdown in the rural demand, Nestle logged double-digit growth (in terms of domestic sales) in its sixth quarter (January-March 2019).

(Edited by: Nehal Solanki)

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