Packets of Maggi 2-Minute Noodles, manufactured by Nestle India (Photographer: Dhiraj Singh/Bloomberg) 

Maggi, Coffee And Chocolates Drove 8.5% Volume Growth At Nestle India

Nestle India Ltd.’s domestic sales growth in the January-March quarter was on account of better sales across its portfolio, particularly for its Maggi and Nescafe brands.

That’s according to Suresh Narayanan, the chairman and managing director at the consumer goods firm. “Out of the 13.4 percent rise in domestic sales, volume growth is 8.5 percent, while about 5 percent is the impact of higher pricing,” he told BloombergQuint in an interaction. “The growth has been secular, it has been volume-based, in keeping with the simple strategy we had put together.”

Nestle’s volume growth is a tad lower than say the 11 percent that Hindustan Unilever Ltd. clocked in the same period. It also doesn’t meet the company’s own goal of “double-digit” volume growth. Though Narayanan said chocolates and confectioneries, coffee and products under the Maggi brands were the three main categories where Nestle saw double-digit growth during the quarter. “Some categories are fairly mature and fairly stable where getting double-digit growth will take time.”

Nestle also improved its operating margin by about 450 basis points. That’s partially due to a lower base in the comparable quarter, but also on account of relatively benign commodity prices and higher output, Narayanan said.

A lot will [now] depend on the commodity tailwinds, impact of overall fuel prices and what happens to the Indian rupee.
Suresh Narayanan, Chairman and MD, Nestle India

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The Kit-Kat maker is betting on the changing consumption habits in urban India and the emergence of tier-II and tier-III cities, which are seeing strong growth.

The company also plans to add breakfast cereals to its portfolio. Nestle SA’s joint venture with General Mills, one of the world’s largest food companies, produces more than 50 varieties of breakfast cereal, Narayanan said. “It is not going to be a modest entry.”

Nestle India is looking to introduce new products in the food and chocolates and confectioneries categories, while pursuing premiumisation in coffee. It launched a line of ready-to-drink coffee cans yesterday.

“More than half of what we have put forward in terms of new products have started to work and contribute towards the company’s growth,” he said.

Also read: Nestlé India’s First Quarter Profit Beats Estimates

Watch the full interview with Suresh Narayanan here.