While Nestle’s focus has turned to category expansion over the past year, the brand’s marquee product Maggi Noodles still gets a lion’s share of the FMCG giant’s attention. Suresh Narayanan, Chairman and MD, Nestle India explains why a leadership position with 61% share is not enough for Maggi.
You have launched close to 40 products from your global portfolio in India in the past year, will you continue to be aggressive on that front?
There will be a fair amount of acceleration in the categories we are currently operating in like milk and nutrition, chocolates and confectionery, and coffee and beverages. We are looking at innovations in a big way. Then there are a few other categories where we are looking for an entry. While these will be from our global portfolio they would clearly be resonant with the consumer journey in India. It will cater to the needs and expectations of the consumers from a company like Nestle and will add a lot of value to our portfolio. For e.g. We made our first foray into the premium segments for Kitkat with KitKat desserts for Diwali which has been met with an encouraging response. You will see some more traction in this category.
You were eyeing a double digit growth this year but after the GST hurdle where do you stand?
As far as we are concerned GST has had a big impact on us, roughly 525 basis points of reported sales comes down because of GST. However the journey to ensure increased penetration and increased saliency for our brands in terms of volume growth, is not diminished by this. So, while we will have to face a GST impact till June of next year, once again from July onwards it will normalize itself because the base effect would have adjusted to the post GST regime. So, our measure would really be whatever value growth we can get but through strong volume growth coming out of penetration.
In that case what is the new likely growth estimate for Nestle this year?
If you look at our last quarter results i.e. that declared till June, 2017, we had about 8.8% of growth in Q2. In that 8.8% growth if you were to disaggregate it, almost 6% was the volume growth which we got. If I am not mistaken that figure was at the top end when compared to the FMCG companies in the country. So our focus on accelerating and increasing volume growth will not be reduced. That will be at the core of our strategy.
You have sprung back as the Market leader in the noodles category, with a 61% share, but still haven’t managed to reach the 75% mark you had before the controversy, where are you falling short?
We have managed to achieve whatever we have achieved thanks to the consumer’s love for the brand and because the consumer’s trust has been with us through thick and thin. Right now we are at about 61%-62% market share. We will increase this by increasing engagement with consumers, relevant innovation etc. Also the fact is that if the category itself becomes larger in terms of total volume then whether I have 65% share or 75% share, it won’t matter so long as the volume base of our brand keeps growing over a period of time. Having said that I don’t think we have lost the ambition or the vision for my team to still come back to that 75% volume share.