Suresh Narayanan, the Chairman and Managing Director of Nestlé India, a company which commands a market capitalization of over Rs 1,94,000 crores, is known as a strong proponent of innovation and technology for business diversification and growth.

Narayanan’s appointment in 2015 coincided with the company’s worst crisis ever. Maggi, its iconic brand, ran into trouble with the Indian food regulators and was removed from shelves across several states.

By the end of 2019, Nestlé India recorded a double-digit value growth over nine consecutive quarters. The company registered growth in FY21 and FY22 as well.
FMCG companies are currently feeling the pinch of inflationary trends. Nestlé is no different although it reported an 8.3% growth in second-quarter net profit to ?668 crore as compared to ?617 crore in the same quarter last year.

Narayanan, who is also the Chairman of the CII National Committee on Food Processing Industries, spoke to e4m on the sidelines of the 6th CII Marketing Leadership Summit 2022 in Mumbai on Tuesday. Excerpts:

There are mixed signals in the Indian as well as the global economy. Some key parameters are getting better, and some are on the downturn. Marketers are quite confused about spending. What would be the advertising and media spend outlook for 2023?

I hope it gets to be more positive because realistically speaking, in 2022 food inflation in companies like mine has been quite serious. Thereby, the capability to be investing strongly in building brand equities for a sustainable future has been somewhat interrupted. I do hope that if the inflationary horizon becomes a little bit better in 2023, we might actually be able to invest much more behind brands and behind creating the equity ecosystem that they need.

How are you dealing with inflationary pressures?

At the moment, the strategy that we have got is to first mitigate as best as we can through the economies and efficiencies we have as a large player in the food space.

In extreme cases, we look at price increases as well where it is beyond our ability to absorb some of the increases in commodity prices. The combination of these is how we have managed to keep in view the interest and strength of the brands that we have with consumers. In all humility, this will also be our strategy going forward.

Nestle is investing a lot in digital advertising. You said earlier that you have close to 3,000 digital ads that are getting changed every minute. Could you please elaborate more on your digital marketing strategy?

Today, most marketing companies in the consumer goods space are digital first. TV commercials still consume a lot of resources mainly because they cater to a large number of consumers. However, digital offers us uniqueness, innovation, customisation and opportunity for penetrating the young population of India. India has the largest Gen Z population which is connected to digital media. They are not watching mainstream TV.

In some of our brands, the share of digital ad spends accounts for 35-45 percent while in some, it is 10-15 percent.

Within digital, which platform is giving the highest ROI (return of investments) to you?

There are numerous digital platforms. We are largely using the usual platforms like Facebook, Google, Twitter and a few others. Some customized platforms also give us a fair amount of traction.

Some advertisers are currently reducing their ad spend on Google and Meta due to various reasons. What is the trend at Nestle?

We are keeping a balance. We have a partnership with Meta and Google. Our goal is to accelerate digital reliance to resonate with consumers for that we use many platforms.

What kind of consumer trends did you observe in 2023?

Consumers at present are operating in two to three spaces; firstly the value space is still very high, and people are looking at value for money.
But there is quite a strong trend towards premiumisation as well due to the aspirational population. The balance of these two trends is going to determine the future of the companies.