Nestle India's Suresh Narayanan hopes for a better Diwali season, pegs on core categories to deliver growth

Nestle India's CMD Suresh Narayanan

Looking at the first upcoming clean, Covid-free Diwali after 2019, Nestle India Chairman and MD Suresh Narayanan feels that Nestle India will “do better than last year”.

In conversation with CNBC TV18, he hopes to be lucky enough to hit double digits, with the only dampener in the equation being food inflation, although witnessing premiumisation in Nestle products at the same time.

Shedding light on packaged foods and beverages, Narayanan says that it constitutes just $100 billion out of the total $800 billion food segment. “Focussing on penetration-led volume growth, it would take us easily a decade or two. So improving on the same will provide good returns by the company," he says, adding that the category is expanding as Nestlé’s resonance is going up even in smaller towns.

Lastly, Narayanan says that the quest for acquisition is definitely there with the company, though there is no desperate need for the same to accelerate growth,  as Nestle has “enough on its plate” to make the core categories deliver growth.

In August this year, in a press briefing, Narayanan said that looking at margins amidst high food raw material prices, 2023 has been better than 2022 from a commodity inflation perspective. The inflation in 2019, 2020, and 2021 combined was less than that of 2022, whereas, 2023, wheat, rice, packaging materials and fuel have remained stable. He states that coffee, as well as the milk process, are a cause for concern because the cost of production has increased for the latter. “Margins would continue to cause some pain, although serious concerns have been mitigated when compared to the previous year,” says the MD.

In the June quarter, Nestle India witnessed an uptick in consumer demand in the rural economy. But that's partly because it has been expanding its rural exposure. Currently, the rural segment comprises about one-fifth of sales. Moreover, the FMCG major launched 10 new products in the first half of 2023

In an exclusive interview with CNBC-TV18 in July, Narayanan said tier-two or tier-six towns are adopting to company's brands and are seeing three broad trends in the market, "One is a strong trend towards premiumisation of brands. So, consumers are trending up in terms of certain categories, brands, and certain preferences."

Nestle has witnessed double-digit growth in 21 out of 26 quarters, In the same almost 15 out of the 26 quarters have been quarters of double-digit profit growth. Founded in 2011, Nestle Health Science sells health-focused and nutrition products.