Nestlé India looks Explore new Product Avenues

Nestlé India, the local unit of the largest food company across the globe, is evaluating five new avenues that it may enter over the next few quarters.

This move is part of the Nestlé’s plan to reduce its dependence on its major product Maggi noodles and get its entire existing portfolio of products back on the path of growth, Suresh Narayanan, chairman and managing director of Nestlé India, commented on Tuesday.

The company is evaluating five categories—Nespresso (a coffee machine), Dolce Gusto (a coffee capsule system), pet care, cereal and skin care. Nestlé India have recently entered the healthcare segment. However, the company is yet to finalize which ones to start with Narayanan said, adding that, globally, Nestlé has around 20,000 brands, while it sells just about 20 in India.

Nestlé India, which entered India in the year 1912, turned into a "demolished house", as Narayanan presents it, after its single largest revenue earner, Maggi, faced a major blow in June 2015. Nestlé could not sell Maggi, which accounted for 30 per cent of the firm’s revenue in 2014, for six months after the Food Safety and Standards Authority of India (FSSAI) ordered the company to withdraw the instant noodles.

The FSSAI order, which was overturned by Bombay high court in the month August of 2015, was based on allegations that Maggi noodles contained harmful monosodium glutamate, and lead in excess of the prescribed limits.

In calendar year 2014, Nestlé India had revenue of Rs 9,854.84 crores. The company’s total revenue is still much below what it was before the ban. In the quarter ended 30th September, it reported revenue of Rs 2,190.2 crores. It was Rs 2,332.6 crores in quarter ended 31st March 2015 (the quarter before the Maggi ban).

The company has already started bringing out new milk products. Narayanan said there is pricing pressure in milk. The company is not into the discounting game. Rather, it will bring more differentiated as well as innovative products, (shift of focus from dry milk to liquid). The company has to make certain trade-offs between value, volume and profitability.

According to Narayanan, the boards of Nestlé India along with Nestlé SA, have agreed that there was a need to "accelerate the game in India", which will require fresh investments in the existing portfolio of the company, new products, renovation and innovation, with a quest to double its revenue in India within four to five years.

Experts had last year indicated that Nestlé India may bring in new range of products from its global portfolio as the company intends to reduce dependence on Maggi noodles.

In the current scenario where the entire market has been jolted by the decision of the government to pull out all the 500 and 1000 currency notes, most of the major shares have declined since morning. Nestlé India share price is currently trading at Rs 6,324.05, up by 1.98 per cent.

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