Nestle adopts regional cluster approach to fast-track growth.

20 March, 2018
Packaged foods maker Nestle India has kicked off a regional, cluster approach for brands, marketing and activation to fast-track growth and has identified enhanced nutrition as a core focus area, company chairman Suresh Narayanan said . 


The maker of Maggi instant noodles, KitKat chocolate and Cerelac infant foods, which crossed Rs 10,000 crore in sales for the year ended December 2017, will push increased penetration of products for volume-led growth, which would lead to profitability, he said. 


“We are evolving a structure to divide markets into 10-15 clusters, and are segmenting product variants, distribution, sales, marketing and communication in relevant geographies,” Narayanan said. Product segmentation would mean regional variants of existing brands across the portfolio, for example, for ketchup, coffee and confectionery. The India arm of the Swiss company is targeting a minimum 3-5% incremental sales each from the regional variants. 

Narayanan said the company is working on reducing salt and sodium content in Maggi noodles by 10% over the next 12-18 months, in line with evolving consumer preferences. Nestle has reduced sodium and salt content in Maggi noodles by about a third over the past few years, and last year, reduced sugar content in chocolate brand Milkybar and Milo milk drink. 

Nestle will accelerate innovation and is looking at a dual strategy of hyper localisation and bringing in new products from its global portfolio including protein supplements, in line with its objective of broadbasing its portfolio as a multi-brand company. Narayanan said of the over 40 new products that were launched last year, about 10-15% needed to be re-tweaked or discontinued, while the rest were successful. He said premium coffee and snacks were potential categories the company is actively exploring venturing into. 

Its mainstay brand Maggi contributed 35% of the company’s reported growth in 2017, while 25% growth came from new products. 

Narayanan said the company, which follows a January-December ’17 accounting year, is optimistic on the consumption outlook. “The last couple of quarters have been fairly encouraging in terms of urban consumption, along with relatively stable commodity prices. Rural growth could be impacted by monsoons, but we expect mid to high single growth,” he said. 

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