Nestlé comes back to growth path af­ter years

Business Standard - - COMPANIES - ARNAB DUTTA

Nestlé In­dia has man­aged to grow vol­ume sales in all its prod­uct cat­e­gories in 2017. While the com­pany has grown its sales over the past few years, ex­cept in 2015, an all-round growth has come af­ter years.

As per the an­nual re­port of the coun­try’s largest pure­play food and bev­er­ages com­pany by rev­enue, dur­ing the cal­en­dar year 2017, four big prod­uct cat­e­gories — milk prod­ucts and nu­tri­tion, pre­pared dishes and cook­ing aids, pow­der and liq­uid bev­er­ages and con­fec­tionery — grew by vol­ume.

Ac­cord­ing to Suresh Narayanan, chair­man and man­ag­ing di­rec­tor, Nestlé In­dia, be­ing nim­ble footed, keenly re­spon­sive and em­brac­ing op­por­tu­ni­ties will be cru­cial for the firm. “2018 is go­ing to be about bring­ing con­sumers closer by be­ing re­spon­si­ble, trans­par­ent and fo­cus­ing on sus­tain­ing long-term re­la­tion­ships that add value” he said.

Milk prod­ucts and nu­tri­tion, the largest cat­e­gory that con­trib­utes nearly 47.6 per cent to the com­pany’s top line, grew 1.6 per cent. Since 2012, the cat­e­gory has grown in value terms with a dip in 2016. But vol­ume growth re­mained miss­ing with up­take de­clin­ing by 1.1 per cent to 5.4 per cent ev­ery year.

Pre­pared dishes and cook­ing aids, pri­mar­ily rep­re­sented by brand Maggi, has been the only grow­ing cat­e­gory for the com­pany for years. In 2015, how­ever, its sales plum­meted af­ter sev­eral bans were levied on its sale for con­tain­ing monosodium glu­ta­mate and lead in be­yond per­mis­si­ble quan­ti­ties. How­ever, af­ter a swift come­back in late 2015, the cat­e­gory grew by 71.5 per cent in 2016 and its growth rate stood at 19 per cent in 2017. Its cur­rent con­tri­bu­tion at 26.7 per cent, though, is yet to match the pre-Maggi ban level of 31 per cent.

Pow­der and liq­uid bev­er­ages, which con­trib­ute 13.7 per cent to the top line, grew 10.6 per cent. This comes af­ter vol­ume up­take shrunk by over 10 per cent each in 2014 and 2015. Up­take in its small­est cat­e­gory — con­fec­tionary — too im­proved as vol­umes grew by 4.3 per cent.

Ac­cord­ing to an­a­lysts, the turn­around in Nestlé’s vol­ume sales is a re­sult of the ini­tia­tives taken in the past two years. Af­ter fal­ter­ing on sales front in 2015, Nestlé con­sid­er­ably ex­panded its port­fo­lio across cat­e­gories and re­duced its de­pen­dence on Maggi. Dur­ing 2016, the com­pany launched over two dozen prod­ucts under milk and nu­tri­tion, con­fec­tionery and bev­er­ages port­fo­lio, apart from ex­pand­ing its Maggi noo­dles vari­ants.

In 2017, its shifted fo­cus on re­build­ing its brand, high­light­ing the safety as­pect. Apart from for­ti­fy­ing a range of prod­ucts, in­clud­ing Maggi, with iron, vi­ta­mins and min­er­als like cal­cium and io­dine, it has sig­nif­i­cantly cut down on usage of salt and sugar in line with the stated ob­jec­tive of of­fer­ing health­ier choices. The com­pany has set a tar­get of re­duc­ing salt by 10 per cent per serv­ing and usage of sugar by 700 tonnes per year till 2020.

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