Swiss FMCG major Nestle expects decent single-digit growth

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Updated: August 20, 2019 12:51:45 AM

Nestle recently announced setting up of a manufacturing plant exclusively for Maggi noodles at Sanand in Gujarat, its ninth plant in the country. It will go on stream in another 18 to 24 months.

Swiss FMCG, major growth despite, economic slowdown, industry news, Nestle, Nestle india, FMCG, Speaking about the recent product launches, Narayanan said out of 61 launches in the last 3 years, around 70% had been successful while 30% remained not so successful.

Swiss multinational FMCG major Nestle on Monday said it is hopeful of registering decent growth in India, in spite of many industries getting impacted by the lingering economic slowdown. The company said it is poised for progress and expects to post at least a decent-single digit growth, from its current modest double-digit growth as it deals with mostly low-cost and daily consumer products.

Further, as a sign of its confidence in the country’s economy, it is evaluating making further investments in chocolate and confectionery segments, following its recent announcement of setting up a Maggi noodles production plant at Sanand in Gujarat, at an investment of Rs 700 crore.

Speaking at a round-table with select media persons here, after launching the cocoa-malt beverage Milo in India, Nestle India CMD Suresh Narayanan said unlike other industry verticals which have been reeling under de-growth, the FMCG sector in general and the company in specific, had not dramatically faced any impact of the slowdown blues.

“We are confident about the future. With relevant focus on advertising & marketing and strategies such as increased penetration-led volume growth, innovation & renovation and cluster strategy, the company is poised for progress,” he said. It will increase the ad spend to 6% from 5.5%. In tier II and tier III towns, the company had registered double digit growth in the June quarter of 2019.

Nestle recently announced setting up of a manufacturing plant exclusively for Maggi noodles at Sanand in Gujarat, its ninth plant in the country. It will go on stream in another 18 to 24 months. “West is an important geography for the company and we have said that we will invest Rs 700 crore in the first two phases. Out of 400 direct jobs being generated, 50% will be provided to women,” he said.

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Speaking about the recent product launches, Narayanan said out of 61 launches in the last 3 years, around 70% had been successful while 30% remained not so successful. “So we need to recalibrate that not so successful products. Time has come for Nestle to perform better with the advent of increased urbanisation and increased premium seeking customers,” he said. According to him, the company’s premium products have clocked the highest growth of around 21%. He said that going forward, e-commerce will be a focus area for the company. Nestle’s e-commerce pie has trebled from 0.5% to 1.5% of the total sales, currently.

“We had sold 30-50 Nescafe e-machines per day through online sales and since fourth quarter of the last fiscal, we had sold a total of 10,000 machines,” he said.

On the new launch, Narayanan said Milo will be manufactured at the company’s Singapore facility for the time being. “We will consider making the product in India once we reach the milestone of 2,000 tonne of supply,” he said. Over 36 million serves of Milo are consumed daily in more than 50 countries across the world. Initially, Milo will be available in South only. It would be test marketed for six months.

Regarding the prices of products, he said the commodity prices have gone northwards, especially in the case of milk and wheat. “The company is trying to mitigate it. During the first half of the year, the commodity prices increased by 200 basis points and we observed 160 basis points,” he said, adding that there could be some selective price hike, going forward.

Nestle India registered a net profit of Rs 438 crore in the second quarter (June quarter of 2019 as the company follows January-December financial year) compared to Rs 395 crore in the same quarter last fiscal, registering a growth of 10.88%. Total sales stood at Rs 2,983 crore, as compared to Rs 2,679 crore, recording a growth of 11.3%.

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