Nestle India seeing ‘early signs of commodity prices softening’, but these items’ costs to remain firm

Nestle India today said that it is seeing early signs of softening of prices in commodities such as edible oils and packaging materials. However, fresh milk, fuels, grains and green coffee costs are expected to remain firm.

Nestle India seeing ‘early signs of commodity prices softening’, but these items’ costs to remain firm
Nestle’s sales in the April-June quarter grew 15.7 per cent on-year to Rs 4,006.86 crore. Image: Reuters

Nestle India today said that it is seeing early signs of softening of prices in commodities such as edible oils and packaging materials. However, fresh milk, fuels, grains and green coffee costs are expected to remain firm with continued increase in demand and volatility, it said, along with reporting its second quarter financial results. Nestle’s sales in the April-June quarter grew 15.7 per cent on-year to Rs 4,006.86 crore, as against Rs 3,462.35 crore last year, the company said in exchange filings, even as net profit fell 4.31 per cent on-year.

Also Read: Nestle India Q2 net profit falls as higher costs eat away sales growth; here’s how much it earned in Apr-Jun

What’s driving the growth?

In terms of growth from various categories, milkmaid showed double-digit growth in the milk products and nutrition category; Kitkat and Nestle Munch in the confectionery category; Nescafe drove sales growth in beverages; and Maggi Noodles in the foods category. Nestle India said that there has been strong momentum in metros as well as across smaller towns which ‘reinforces the execution of our RURBAN strategy’. E-commerce sustained good growth despite higher base from Covid related tailwinds in Q2’21 and contributed 6.4 per cent to the quarterly sales, the company said.

“I am also happy to share that the ‘out of home’ space got back to accelerated growth in channels like hotels, education centres and workplaces. As far as channels are concerned, ‘organized trade’ saw broad based growth across consumers and categories,” said Suresh Narayanan, Chairman and Managing Director, Nestle India

In terms of new categories, Nestle also announced that its Board of Directors have approved the acquisition of the Pet Food Business from Purina Petcare India Pvt Ltd for Rs 123.5 crore, and the integration of the two is proposed with effect from October 1, 2022. Suresh Narayanan also announced the launch of Gerber in India. “In coming months, products tailored to the needs in the toddler segment, relevant and resonant to their nutrition needs in India would be introduced under brand Gerber,” he said.

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