Rural Areas Will Contribute One-Third Of Sales In Three Years, Says Nestle
Nestle India Ltd. is expanding its rural sales network and expects to have around 30 to 35 percent of its total sales coming from the country's hinterland in the next 2-3 years, a senior company official said on Monday.
The company is witnessing "convergence of lifestyle" in the tier-III and below markets, led by "Jio effects" on the rural markets, as a result, "we are seeing demands of the same offering as in the developed metro markets", said Nestle India Chairman and Managing Director Suresh Narayanan.
"Today, rural sales contribute around 25 percent of Nestle India's total sales and I will be happy if in the coming 2-3 years, it goes to 30 to 35 percent," Narayanan said in a media roundtable in Ludhiana .
In the past five years, fast moving consumer goods company’s rural sales have gone up by 10 percent, he added.
The company is working to enhance its distribution network, focus on core brand category and affordability with lower-priced packs.
"There could be small pack sizes and specific innovations," he said adding that "convergence of aspirations is likely to continue".
The company, which follows January-December as financial year, recorded a revenue of Rs 11,292 crore in 2018.
For the rural markets, the company would have a combination of direct distribution and wholesale trade channel.
"The route to market has to be different. It cannot be the same," he said.
Besides, the company, which currently has around 1.5 percent sales from e-commerce channels, is also encouraged by the growth of online sales.
Nestle India, has so far sold more than 11,000 units of Nescafe machines in 650 towns, Narayanan said.
"The aspiring India at tier-II and III is what we need to watch out for in future and it is that which is getting excited for us," he said adding that demand is now coming from smaller 10,000 to 15,000 population small towns.
Last month, Nestle India, which covers 52,000 villages directly, said it plans to double the reach in the coming year.
Nestle India is also commemorating a decade of Nestle Healthy Kids programme in India, which has impacted nearly 3 lakh children across 22 states.