Nestle India shifts to ‘aggresive growth strategy’; will maintain pace of advertising

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New Delhi | Published: February 19, 2019 4:41:02 AM

Nestle India will keep the pace of spending on advertising and marketing activities up in 2019, as was the case in the December 2018 quarter.

nestle, nestle indiaIn the last few years, Nestle India has launched 10-12 new products each and currently has around two-three dozens projects running which may result in new product offerings.

Nestle India will keep the pace of spending on advertising and marketing activities up in 2019, as was the case in the December 2018 quarter.

“The company is locked in a position of aggressive growth strategy. There are clear indications that India is a growth market for Nestle,” said Suresh Narayanan, chairman and managing director, Nestle India.

He added that while the company does not plan to increase advertising spend from the current level but the pace will remain strong.
The pure-play food company in the December 2018 quarter reported a 30% year-on-year increase in other expenses to Rs 814 crore and attributed the increase to ‘step up in demand generation activities including on new products’.

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In a report, Kotak Institutional Equities noted, “…if we were to attribute all the increase in other expenses to ad spends, is not consistent with the Nestle style of execution we know of and would be very, very surprising”.

According to Narayanan, support to advertising and marketing — part of other expenses — increased by 50% in 2018. In Q4 of CY18, the company invested in NESPLUS, a range of breakfast cereals, which the company claims to be a promising category. “The company may pull out resources where it is not working and put it where it is working,” said Narayanan.

The company follows a January to December financial year. The increase in other expenses during the December 2018 led to a 6% y-o-y decline in earnings before interest, tax, depreciation and amortisation.

In the last few years, Nestle India has launched 10-12 new products each and currently has around two-three dozens projects running which may result in new product offerings. The new offerings include ready-to-drink coffee cans, Maggi variants and Nescafe Smart coffee machine, among others.

The company which has eight factories as of now may soon take a call on capacity expansion to take care of the need for more production facility with the growing number of offerings. “While typically the company would want to augment the existing factories, greenfield or brownfield expansions are not ruled out,” said Narayanan.

Nestle India also plans to launch a website, AskNestle.com, in the next few weeks as a platform with reliable and scientifically proven information on nutrition which will help in making healthy choices.

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