Product consolidation on anvil: Nestle India
Source : THE HINDU
Parent opens Food Safety Institute
FMCG major Nestle India is looking at consolidating its product portfolio in the country, while also focusing on growing volumes by increasing penetration.
The company will also bring out new products in segments such as coffee and chocolates, ahead of the festive season.
Nestle is also eyeing India as a hub for spices to be used across its products globally, with the launch of its Food Safety Institute — second globally after China — on Wednesday.
‘Can’t support many’
“We have put in a number of products in the market; now, we are in the process of consolidating,” Nestle India CMD Suresh Narayanan said. “Which product is working, which is not, which could be regional, which could be national… we can’t support so many products going forward.”
He said that the company was looking at adding more products in “chocolate and confectionary, coffee and in milks as well” but that it would need to look at what was already there on the plate. “You need to prioritise on what you need to focus on, and that core exercise is happening,” he said.
Nestle India had introduced more than 42 products in the last two years. “The opportunities that I see for the company… Many of our categories still have a lot of the way to go in terms of penetration. That is why I am talking about volume growth…. we want to increase penetration and go for volume growth,” Mr. Narayanan said.
Mr. Narayanan, however, added that there was likely to be lower growth in value terms due to the new indirect tax regime.
“In the GST, the excise duty is subsumed into GST itself so it hits the sales side straight away. As a company, on average about 525 basis points of sales will get be reduced because of the GST,” he said, adding that if the company was to grow at 10%, this would show as 4.75 per cent. The volume growth should not change, but value will record a smaller growth, he said.
This would carry on till June quarter next year, Mr Narayanan said. He pointed out that while there are a few operational issues, the settling in into the GST regime “has been reasonably good”.
Talking about the company’s Food Safety Institute launched in Manesar on Wednesday, the second such institute, the first one being in China, Mr. Narayanan said, “The R&D Centre, under which theiInstitute comes, is part of our global network. It is not a Nestle India initiative, but a Nestle global initiative.”
The funding of about ₹257 crore for both has also been done by the parent company. The India R&D centre is currently the hub for company’s noodle segment products, and the FMCG major is now looking developing it as a global spice hub with the new food safety institute.
“The mission of NFSI India is to build and share knowledge through collaborative partnerships for strengthening the food safety environment in India,” Mr. Narayanan said, adding that the institute will act as the local interface of Nestle’s Global food safety and research capabilities and will leverage expertise in food safety science to collaborate with reputable academics, government agencies and research institutes in the country.
Pawan Agarwal, Chief Executive Officer at Food Safety Standards Authority of India (FSSAI), who inaugurated the facility, said the institute will conduct training programmes on Food Safety Management Systems, Testing Methods, and Regulatory Standards.