‘NOTE BAN CAUSED SALES LOSS OF ~100 CRORE’

FMCG major Nestlé India launched a record 30 products last year after recovering from the ‘Maggi crisis’. SURESH NARAYANAN, its chairman and managing director, tells Arnab Dutta the company is looking at strengthening its base for the volatile days ahead.

“GROWTH WILL NOT BE EASY TO COME BY. IT WILL TAKE TIME. BUT, PUTTING IN PLACE THE RIGHT PORTFOLIO, PLAN AND VALUES ARE IMPORTANT NOW...”

Fast-moving consumer goods major Nestlé India launched a record 30 products last year after recovering from the biggest crisis that it faced in the country. SURESH NARAYANAN, chairman and managing director, who is also known as “turnaround MD”, tells Arnab Dutta that the company is looking at strengthening its base for the volatile days ahead. Edited excerpts:

Various macro economic and political factors are unsettling companies. Where does the India business stand for Nestlé?

Global macro economic conditions are going to remain volatile and Nestlé is preparing for that. The whole globalisation paradigm is under question. How these factors affect organisations is still to be seen. Earlier, Asian counties like Turkey and Indonesia were growing very fast for us; that has come down over time. Demonetisation in India has led to ~100 crore loss of sales for us in the December quarter.

But, India continues to remain our focus and we expect it will drive growth for Nestlé in the coming years. The message we get from the global leadership is, growth with efficiency and (better management of ) cost is going to be the way forward.

Growth in India has been missing for you for the past four-five years. How do you plan to address that?

First, value equations that can offset the downside risk of losing volumes will be a key area. For example, in infant nutrition, where the volumes have not been growing for quite some time, we are trying to hedge it by introducing purely premium offerings, which will help us keep the prices of our present portfolio affordable. This will help in growing of volumes.

Second, increasing penetration and expansion of our existing portfolio. Our 75 per cent of sales come from urban areas and studies show that incremental growth will come from 600 towns. We are trying to increase our penetration in these areas. It will play a crucial role in the next five to 10 years.

Third, venturing into new categories and growing our business in India. This will ensure stability even during volatile times.

Growth will not be easy to come by. It will take time. But, putting in place the right portfolio, plan and values are important now, rather than harping on what it could have been.

What is your product strategy?

Almost 60 per cent of our consumers are young (below the age of 30 years), more aware as buyers and health-conscious. So, our focus is now on a healthier portfolio. We are cutting on sodium (and salt), sugar and trans-fat in our products. In Maggi noodles, for example, we have brought down the sodium content by a third over 10 years. In baby foods, we have started reducing sugar. Also, fortification is a focus area. Masala-emagic is the only fortified masala in India. We are working in tandem with FSSAI’s (the sector regulator's) food fortification drive and milk will be the next product.

After last year’s record number of product launches, how many do you plan to launch in 2017?

I can’t put a number right now. We have to decide which ones (among last year’s launches) to continue and which to pull out. We want to expand the portfolio in the ready to eat and drink category and under brand Maggi. We have reintroduced Milo here after 10 years, in a ready to drink form. Growth in the ‘out of homeready to drink’ category in India is probably the fastest in the world. Under Maggi, there will be new variant launches in 2017.

We are also gearing up to venture into new categories like premium coffee, pet care and cereals. Our health care and skin care categories are huge globally but here they consist of very few products. These will be ramped up in the next two-three quarters. It will also cover the older consumers, which will grow over the next decade. We already have infrastructure and separate teams for that, and we want to leverage these now.

Have you put a freeze on hiring and lowered investments, due to macro factors?

Under current circumstances we are supposed to keep the belt tight and maintain strict cost management. But, we are investing in manpower, especially on people working in sales and marketing. The new launches require BTL (below-the-line) marketing activities and we are hiring for that.

Is Nestlé India planning to increase exports?

We currently export to about 30 countries and get five per cent of our sales. This year, we will definitely try to increase that share but touching 10 per cent might take a few years.