Nestle to grow in health, nutrition space: analysts

MUMBAI: Consumer goods major Nestle India plans to focus on growing in the nutrition, health and wellness space, while it rationalises its product portfolio at a time when there is pressure on volumes amid a challenging environment and intense competition in key categories like noodles and chocolates.

Domestic volumes of the maker of Nescafe, Maggi noodles and Kitkat chocolates, grew just under 1% in 2013. Volumes in milk products and infant nutrition, which at present contribute to 45% of Nestle’s sales, declined 3.5%. Analysts who closely track the company don’t except a significant pickup anytime soon.

“Nestle’s strategy of driving resources behind high margin portfolio is long term positive but impacts volumes in the near ter m. Despite a weak base, we do not expect its volume growth to show material improvement,” said Gautam Duggad, analyst, Motilal Oswal Securities.

Several analysts, who were recently briefed by the management, expect volume growth over next few quarters too will be in low to mid-single digits.

Nestle India appointed Etienne Benet as its MD from October last year, in a management rejig. “Nestle’s priorities, under the new managing director, would be to drive the nutrition, health and wellness agenda and look at all brands through this compass,” said Harit Kapor of IDFC.

The company is also focusing on portfolio optimisation to focus on growth and prioritise investments and resources. Like, the company is focusing on large packs, while de-focusing on smaller packs priced at ` 5-10 or lower. It will relook at products that have not been performing well, and may even divest some, say analysts.