On Friday, Nestle India declared its dedication to investing approximately INR 4,200 crore by 2025. This substantial investment will encompass various ventures, including the establishment of their tenth factory in the state of Odisha.
The leading packaged food company envisions its next phase of growth to extend beyond metropolitan areas and also focus on expanding its presence in semi-urban and rural regions, which presently contribute around 20 percent to its overall sales. Simultaneously, the company is placing significant emphasis on seizing the premiumisation opportunity.
Speaking at a select media roundtable, Suresh Narayanan, Chairman and Managing Director, Nestle India, said, “Our investments in Make-In-India have been significant. From 2020 until the first half of 2023, we have already spent about INR 2,100 crore on the augmentation of manufacturing capabilities. Now, another INR 4,200 crore will be invested from 2023 to 2025. This includes about INR 894 crore of investments in the new factory in Odisha.”
In addition to establishing the new plant in Odisha, the recent investments will also support the phase-3 and phase-4 expansion of the company’s Sanand factory, along with capacity enhancements at the Moga factory.
During the June quarter, the company experienced a substantial 15 percent increase in total sales, accompanied by a notable volume growth ranging from 4 to 5 percent.
“The next phase of growth is not just going to come from strengthening our portfolio in urban India but also in semi-urban and rural India. We are seeing growth not just in mega towns and metros but also in Tier 1-6 towns,” Narayanan said.
He emphasized that the company’s current focus lies in expanding its distribution network in semi-urban and rural areas across 12-13 States. Additionally, they aim to enhance their product portfolio’s relevance in these regions by introducing suitable packaging options.
Amid the rising aspirations of Indian consumers, the packaged food leader is further bolstering its premium offerings in diverse categories, such as chocolates and coffee.
“While a third of our portfolio is price-point-led, wherever we have opportunities for premiumisation, we are doing it aggressively,” he added.
Narayanan emphasized that although headline inflation is manageable, the worrisome aspect lies in the persistent issue of food inflation.
“With the kind of torrential rains that are taking place, what impact will this have on the winter crops, It’s anybody’s guess… I would still say the specter of food inflation is going to remain. It’s not something that we can wish away that quickly,” he said.
