Page 11 - ABFI March 19 issue

cover story

consumers besides tools to In 2018, our core brands have performed well… support would continue
enable consumers to make as Nestlé sought to ramp
healthier choices. He said We look forward for greater acceleration as we up the contribution of
that this will be information go forward… We have two-three dozen projects new products in its overall
dissemination and interactive (products) in pipeline for launch in 2019. These portfolio. Nestlé India is
platform for consumers and considering expanding its
the company won’t use it for products are across categories production capacity this year.
product promotion. “Nestlé - Suresh Narayanan, CMD, Nestlé India The company may opt for a
spends nearly $2 billion green field project after seven
annually across its R&D years to meet the growing
facilities around the globe products will be good for the that matrix.” demand of its products.
and we do a lot of work in company," he added. Nestlé, The company is looking According to Narayanan, in
the nutrition and wellness which has rolled out new to boost its presence in the 2019, the firm would focus
space and we want to share products such as premium breakfast category with on consolidating its business
this with consumers,” he chocolates, dips and spreads, Indian options. It entered activities by adding capacity
said. Nestlé India, which breakfast cereals, nutrition the Rs. 2,500-crore cereal and strengthening the market
crossed the Rs. 11,000 crore bars, and ready-to-drink milk market in 2018 with NesPlus. position of its newly launched
mark turnover in 2018, said beverages in the last two Euromontior International products.
that substantative part of the years, has also recalibrated expects the market to grow "We are seriously
overall growth last year came its distribution to reach more at a 10.7% annualized rate considering expanding our
from strong volume growth. consumers. between 2018 and 2023. Last capacity - either by adding
Nestlé is cautious and year, Nestlé India launched lines in our existing facilities
Continue its Launch Spree could also discontinue Nescafe read-to-drink cans, or through a new plant," he
The company recently products that are facing weak NesPlus, Maggi baked said. While Narayanan did
launched a bitter gourd- consumer demand, even as noodles, Maggi dip and not specify the quantum of
flavoured yogurt after its it pushes new products. “For spread, Nescafe coffee maker- investment Nestlé is keeping
entry into the breakfast cereals 2019, we can also look at a bit mug and Everyday Chai Life aside for the move, industry
market last year. Nestlé has of consolidation," Narayanan instant tea mix. analysts estimate that the firm
been on an innovation spree said. Higher advertising and New launches, however, may need to allocate Rs. 300 -
after facing a crisis that saw marketing spending also meant higher marketing costs. Rs. 500 crore for the purpose.
its popular brand of Maggi dragged down margins at In the October-December The last time Nestlé set up
noodles being banned across the company, which stepped quarter, Nestlé India’s a plant in India was in 2012,
India. The company has since up efforts to back its new earnings before interest, when its facility at Tahliwal,
pushed for diversification of and existing brands. A basis depreciation, and tax and Himachal Pradesh, became
its portfolio. As a result, its point is one-hundredth of a amortization margin stood operational at a cost of Rs. 400
product launches have seen a percentage point. For the full at 19% compared with 20.5% crore.
spike. year of 2018 marketing and a year ago. That’s because The timing of the new
Between 2016 and advertising spending for the its other expenses rose 31% project coincides with the
2018, Nestlé India saw 40 company was 6-7%. on higher advertising and firm's appetite for growth.
new brand launches in the Nestlé India Ltd. said it promotion spends. But an In the past three years,
aftermath of the Maggi ban. will continue to launch new aggressive strategy doesn’t since its crown jewel Maggi
Of these, 10 products were products aggressively this mean that the company will noodles made a re-entry into
subsequently discontinued. year as it chases a volume- not focus on profitability, the market in November
Analysts remain largely led growth. “Innovation-led Narayanan said. 2015, Nestlé launched well
positive about new products volume growth will continue over three dozen products
being rolled out by the to be a core strategy for Ramping up Production and ventured into new
company. “Nestlé has Nestlé,” Narayanan said. “We Capacity categories like breakfast
typically been conservative are not changing anything of Narayanan said brand cereals, nutrition for lactating
when it comes to innovation mothers, specialized health
in India as it has traditionally supplements for patients and
focused on the bottom line. consumer appliances.
However, that has been The contribution of new
changing over the last few launches at 3% of its domestic
years as it is investing in new sales during January-June
products," said an Analyst on 2018 is higher than 2.8%
condition of anonymity. during the same period the
“Some blockbuster previous year. Activities and

AgriBusiness & Food i ndustr y March 2019 11