Nestle, a leading FMCG company, is expanding its manufacturing capabilities and operations in India. According to Suresh Narayanan, the Chairman and Managing Director of Nestle India, the company will invest between INR 6,000 to 6,500 crore from 2020 to 2025 to cater to the increasing demand. He mentioned that Nestle India had invested INR 7,000 crore from its inception to 2020, but the investment in the past five years has surpassed that of the previous 20-25 years.
Earlier, Nestle India had announced plans to invest INR 2,000 crore between the years 2000 to 2020. Subsequently, in 2022, it disclosed another significant investment of INR 5,000 crore for expansion, set to be completed by 2025.
“So if you take out the common years in the middle of the investment, the net investment would have been about INR 5,800 crores. We are well on that track. I think INR 3,200 crore has already been invested between 2020 and 2023,” said Narayanan.
Nestle India, renowned for its popular brands like Maggi, Nescafe, and KitKat, is establishing its tenth factory in Orissa. Additionally, it is enhancing production capacities for prepared dishes, particularly the Maggi range, doubling its coffee business, expanding chocolate lines, and boosting investment in distribution chains.
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“By 2025, we might be recording almost INR 6,000 crore to INR 6,500 crore investments that we would have put since 2020,” he said adding this indicates “underlying robustness of demand for our products” but also the “commitment to the making India” philosophy, he added.
In 2023, Nestle’s sales surpassed the INR 19,000 crore mark. Presently, India ranks among the top ten markets for the Swiss multinational company, Nestle SA.
“We have some strong hefts in some of the business. We are ranked very well globally. I think the outlook on India is very, very positive. And there is a lot of Equity goodwill support,” he said.
Although Narayan refrained from disclosing specific future figures, he expressed his satisfaction with Nestle India’s sustained growth trajectory and indicated his optimism for its continued progress.
“If you look at our 2016 to 2022 performance, it has been around 11 to 12 per cent Y-o-Y growth and slightly higher on profitability. If I am able to deliver that on a larger base, that will be a good objective,” he said.
Regarding the demand landscape, Narayanan highlighted that the urban market has experienced significant expansion, particularly showing a robust preference for certain products. Additionally, smaller markets in tiers II, III, IV, and V are also emerging, and Nestle is actively assisting them through appropriate portfolio adjustments and expanding distribution channels.
“In fact, if you look at urban penetration now for the company, which five years ago was about 80 per cent today it is about 93 per cent and similarly, rural penetration also has gone up significantly to rate to about 30 odd per cent, which was in a mid to high single digits a couple of years ago,” he said.
This as a cumulative effect has led to good results. In the last 28 quarters or 22 quarters, Nestle India has reported double-digit quarters, he said.
The company’s growth is evident in its capital expenditures (capex), with the current investment at 8 percent of its turnover, a considerable increase compared to previous levels.
“In the last seven, eight years, it was in the region of about 2 to 3 per cent,” said Narayanan.
Nestle is also keeping its innovation tempo high and has launched 130 new products in the last seven years, which is helping to diversify its offerings.
On the sales front, Nestle is now using AI-enabled analytics for sales automation. Many of its brands like KitKat, Maggi and Nescaffe are highly digital now in terms of consumer outreach.
“Almost 40 per cent of our media expenses as a company if we look at aggregate is being spent on digital today,” he added. In the December quarter Nestle India contributed 7 per cent of domestic sales.
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