Nestle India is intensifying its efforts to boost volume growth in the face of an inflationary market. The company has announced plans to further expand its distribution network, a crucial driver of growth, aiming to reach approximately six million touchpoints within the next 4-5 years, up from the current 5.1 million touchpoints.
Suresh Narayanan, Chairman and Managing Director of Nestle India, expressed that the consumer goods industry stands to gain from increased private consumption, driven by favorable monsoon conditions and the injection of capital into the market following the formation of the new government post-elections.
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Narayanan noted that inflation continues to influence the market. While there were hopes for increased consumption due to elections, the hot summer weather might lead to it being perceived as “just another normal month.” He emphasized that the market eagerly awaits a good monsoon and the injection of capital by the new government, which would stimulate consumption.
The company, which achieved a domestic sales growth of approximately 9% in the March quarter, reported a volume growth rate of around 4-5%. “The success of consumer goods companies in the future will depend on their ability to reach more households with a wider range of products and for various occasions,” he remarked.
According to Narayanan, the company’s future strategy calls for faster volume growth. The company has adopted a penetration-led volume growth approach. I thus want to return as soon as possible to volume growth and not drag on with merely value growth,” he continued.
The company is enhancing its focus on premium offerings by investing in nutraceuticals and pet foods segments, as well as launching the Nespresso portfolio in India. Discussing the recent decision to establish a joint venture with Dr. Reddy’s Laboratories in the health science nutraceuticals sector, Narayanan mentioned that currently, this business operates within a relatively modest space, generating revenue of approximately INR 50 crore. “We are aiming at doubling or tripling this business in the next 4-5 years,” he remarked.
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