"If you look at the aspiring class, the affordable class and the wealthy into the country, research after research are showing that between 2018 and 2030, we are going to add almost 140 million households to the aspiring and to the affluent class," he said.
We expect Nestlé’s EBITDA margins to bounce back on the back of the company’s strong pricing power and operating leverage.
The Indian packaged food market is expected to be double and grow up to USD 70 billion in the next 5-10 years, led by factors that include economic growth, demographic dividend and growing e-commerce, said Nestl India Chairman and Managing Director Suresh Narayanan on Friday.
The company is also waiting for the government’s production-linked incentive (PLI) scheme for the food processing sector, which would be a good step for the industry that has the best ratio of capital investment and employment generation.
“I am a firm believer of the consumption story of this country,” said Narayanan while addressing a virtual media roundtable.
Surveys conducted by all major agencies suggest the packaged goods market to double in the next 5-10 years, he added.
“The market today is worth USD 35 billion and we are expecting it to go to USD 70 billion,” said Narayanan while adding that because of the pandemic, there could be some delay in that but “cannot be denied also”.
There are factors such as ‘demographic dividends’ and ‘economic reasons’, which would help the food processing industry with a digital push.
“If you look at the aspiring class, the affordable class and the wealthy into the country, research after research are showing that between 2018 and 2030, we are going to add almost 140 million households to the aspiring and to the affluent class,” he said.
He also added that the bottom of the pyramid, those who are the deprived, is going to shrink. This clearly means that there is going to be an increasing proclivity towards the consumption of packaged goods and also of branded goods, Narayanan added.
“It is also interesting to note that the component of Generation-Z, which is the generation coming into the workforce, is almost going to be 25-30 per cent of the population,” he said. Narayanan also added that the digital connectivity and digital pace of India are truly meteoric.
Today, India has about 140 million consumers who are in the e-commerce space and is expected to be almost triple in the next 5-10 years. Total people accessing the internet, which is about 600-650 million, is expected to be a billion people, he added.
“In every sense of the terms, the results of the economic cycle, demographic cycle, digital cycle and the aspiration in the rural and urban India would probably lead to a robust future as far as the consumer goods are concerned,” he said.
While talking about the PLI scheme, Narayanan, who is also chairman of industry body CII’s National Committee on Food Processing, said dialogue with this still going on. “The dialogue is still on. The PLI scheme is being finalised, we are expecting an announcement relatively soon and then we will look at what emanates,” he said.
According to Narayanan, it is a good step for the food processing industry, which has the best ratio of capital investment and employment generation.
“The employment generation multiples in food generation (companies) and is among the best of all manufacturing industries and if we look at one economic and social task that faces all of Indian, it is the generation of job and I do hope something positive comes out of it,” he added.
In October last year, Nestle had announced to invest Rs 2,600 crore further into India over the next 3-4 years on expansion on the existing units and towards the construction of its new upcoming unit as Sanand, Gujarat.
Currently, Nestle operates eight production units in India. It had reported a net sales of Rs 13,290.16 crore for 2020. Its net profit was up 5.79 per cent to Rs 2,082.43 crore. The Indian market was ranked 13th in terms of contribution to Nestle’s global revenue in 2019.