Nestle India may increase prices and enter smaller towns

Amid inflationary pressures across industries, Fast-Moving Consumer Goods (FMCG) major Nestle India could look at hiking prices in extreme cases where where it unable to absorb the rise in commodity prices. The company has shifted its focus on brands that will provide better value outcomes. 

Speaking to businessline Suresh Narayanan, Chairman and Managing Director of Nestle India, said that his company, which manufactures products such as Nescafe, Maggi, Kit Kat, Milkmaid and Nestea, is trying to mitigate input cost pressures through economies.

“In 2022, food inflation in companies was quite serious. We are recalibrating our portfolio towards brands that are capable of giving better value. In extreme cases we may look at price hikes where it is beyond us to absorb the hiked commodity prices ,” Narayanan said at the Confederation of Indian Industry Marketing Agility in the Age of Uncertainty event.

Rural focus

The company is shifting its focus to penetrate deeper into the rural market.  “Aspirational India is seeking availability as a key vector. We were earlier operating in metros and large cities, and now we are looking at penetrating small towns and covering 2,000 villages that have a population of more than 2,000. We have covered more than half of 2,000 and are seeing encouraging signs,” said Narayanan.

The company has also witnessed growth of value packs and premium products across the market. “In some parts income and purchasing power have been hurt. There is a focus on value packs and some amount of downtrading in categories.” said Narayanan.

Via Railways

To penetrate deeper into the country and reach a larger consumer base, the company has increased the movement of its products through Indian railways. “Railways has done a tremendous job. Six to seven per cent of our logistic movements are via railways now, which earlier was 1 per cent or less,” added Narayanan.