Rural, semi-urban markets growth areas, says Nestle India CMD Suresh Narayanan on 30 July

Rural, semi-urban markets growth areas, says Nestle India CMD Suresh Narayanan on 30 july

Nestle India’s chairman and managing director, Suresh Narayanan, stated that the company’s growth trajectory is expanding beyond urban centers and mega cities. He highlighted the significant potential for growth in semi-urban and rural markets.

According to Narayanan, Nestle India is experiencing robust growth not only in urban centers and metropolitan areas, where growth has been traditionally strong, but also in smaller towns categorized as TC 1 to TC-6. These towns represent semi-urban and rural markets with varying levels of population and infrastructure.

The growth in these semi-urban and rural markets has been in double digits, indicating the rising demand for Nestle’s products and services in these areas. The company’s focus on enhancing its penetration and presence in these regions has contributed to its success.

By targeting the semi-urban and rural markets, Nestle India aims to tap into the growing purchasing power and consumer preferences in these regions. Factors such as increasing disposable income, improved distribution networks, and changing consumer lifestyles are driving the demand for Nestle’s products beyond the traditional urban centers.

Narayanan’s observation underscores the importance of diversifying and expanding market reach for sustained growth. Nestle’s commitment to catering to the needs of consumers in semi-urban and rural areas demonstrates a strategic approach to capture untapped market potential and drive overall business expansion. As the company continues to strengthen its presence in these markets, it is likely to enjoy sustained growth and reinforce its position as a leading player in the Indian market.

Nestle India’s Managing Director, Suresh Narayanan, highlighted the strong growth the company is experiencing in rural India. Currently, approximately 20% of Nestle India’s revenue comes from rural areas, indicating the significant business potential in these regions.

While the company’s revenue base in rural areas stands at 20%, Narayanan emphasized that it is not to be considered small, as it still represents a substantial business size. Nestle India is pleased to witness the positive response and acceptance of its brands among consumers in rural India.

Narayanan revealed that Nestle India has identified 12-13 states where it plans to increase its penetration into rural markets. To achieve this, the company is strategically focusing on relevant products, establishing infrastructure, and enhancing its manpower in these states. Rather than attempting to cover all 29 states, Nestle India is strategically tailoring its offerings to the specific geographies of these targeted states.

The company’s approach includes fine-tuning its portfolio and stock-keeping units (SKUs) to cater to the preferences and demands of consumers in the identified states. Additionally, Nestle India is working to increase the number of distribution points in these regions, which would facilitate greater accessibility of its products to rural consumers.

By concentrating on selected states and investing in appropriate products and distribution networks, Nestle India aims to strengthen its presence and market share in rural India. The company’s focus on rural markets aligns with its growth strategy, leveraging the untapped potential and consumer acceptance in these regions. As Nestle India expands its footprint in rural areas, it is likely to bolster its overall growth and reinforce its position as a leading player in the Indian food and beverage industry.

Nestle India’s Managing Director, Suresh Narayanan, addressed reporters a day after the company reported impressive financial results for the second quarter of 2023. The FMCG major witnessed a remarkable 37% increase in net profit, reaching Rs 698.34 crore, compared to Rs 510.24 crore in the same period the previous year. Net sales also demonstrated significant growth, rising by 15% to Rs 4,619.50 crore from Rs 4,015.98 crore in the corresponding period of the last fiscal year.

During the discussion, reporters questioned Narayanan about the impact of food inflation, a significant cost factor for the food and beverage major. In response, Narayanan acknowledged that food inflation remains a relevant concern and emphasized the importance of appropriate pricing strategies for their products.

He stated that if commodity prices remain stable, especially for essentials like wheat and milk, then there might not be any immediate need for price adjustments. However, he noted that coffee prices have surged significantly, rising by almost 50-60%, which might require careful consideration when setting prices for coffee-based products.

Narayanan also explained that there are limited opportunities to make substantial downward adjustments (price cuts) due to the current commodity market conditions. This indicates that the company may be cautious about reducing prices in response to rising commodity costs, especially when it comes to essential commodities with limited price flexibility.

Overall, Nestle India’s strong financial performance and Narayanan’s prudent approach to pricing in response to food inflation indicate the company’s focus on maintaining a balanced and sustainable growth strategy. By carefully managing commodity costs and pricing decisions, Nestle India aims to continue its positive trajectory while delivering value to consumers and shareholders alike.

Nestle India’s Managing Director, Suresh Narayanan, revealed the company’s ambitious investment plans for the coming years. Nestle is committed to significant investments in local manufacturing, with a total planned investment of Rs 4,200 crore by 2025.

As of the first half of 2023, Nestle has already invested approximately Rs 2,100 crore in capital investments. These investments signify the company’s commitment to expand its manufacturing capabilities and enhance its operations in India.

Looking ahead, Nestle India plans to make additional investments amounting to Rs 4,200 crore between 2023 and 2025. A significant portion of this investment, around Rs 900 crore, will be allocated to setting up its 10th manufacturing plant in the state of Odisha. This new factory in Odisha reflects the company’s strategic move to strengthen its manufacturing infrastructure and increase its presence in the eastern region of the country.

The planned investments demonstrate Nestle’s confidence in the potential of the Indian market and its long-term commitment to India’s growth story. By expanding its manufacturing capacity and establishing a new plant in Odisha, Nestle India aims to cater to the increasing demand for its products and capitalize on emerging opportunities in the country’s consumer goods sector.

These substantial investments will not only bolster Nestle India’s production capabilities but also contribute to job creation, economic development, and overall industrial growth in the regions where the investments are made. The company’s commitment to local manufacturing aligns with the government’s “Make in India” initiative and reinforces Nestle’s position as a prominent player in the Indian food and beverage industry.

Nestle India’s Managing Director, Suresh Narayanan, emphasized the company’s substantial investments made in capital expenditures until the first half of 2023. So far, Nestle India has invested approximately Rs 2,100 crore in various capital projects aimed at expanding and enhancing its operations.

Looking ahead, Nestle India has even more ambitious investment plans for the period between 2023 and 2025. During this time frame, the company intends to invest an additional Rs 4,200 crore in various capital initiatives. This significant investment reflects Nestle India’s commitment to further strengthening its manufacturing capabilities, infrastructure, and distribution networks in the country.

Out of the total planned investment of Rs 4,200 crore, around Rs 900 crore has been allocated to set up a new factory in Odisha. This new manufacturing facility in Odisha represents a strategic move by the company to expand its production capacity and serve the growing demand for its products.

The combination of past and future investments showcases Nestle India’s confidence in the Indian market’s potential and its long-term commitment to India’s economic growth. These capital investments will not only enable Nestle India to cater to the evolving needs of Indian consumers but also contribute to the development of local economies and generate employment opportunities.

As Nestle India continues to invest in capital projects and expands its manufacturing footprint, it is likely to reinforce its position as a leading player in the Indian food and beverage industry. The company’s focus on strengthening its manufacturing capabilities aligns with the government’s push for domestic manufacturing and reinforces its commitment to local sourcing and production, contributing to the vision of a self-reliant India.