Nestle implements regional cluster approach to accelerate growth

27 Feb, 2018

 

Nestle India has instigated its regional, cluster approach for brands, marketing and activation to fast-track growth and has identified enhanced nutrition as a core focus area, informed the company’s Chairman Suresh Narayanan.

The maker of Maggi instant noodles, KitKat chocolate and Cerelac infant foods 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.

Nestle India is targeting a minimum 3-5 per cent incremental sales each from the regional variants and is developing a structure to divide markets into 10-15 clusters, and are segmenting product variants, distribution, sales, marketing and communication in relevant geographies. Product segmentation would mean regional variants of existing brands across the portfolio, for example, for ketchup, coffee and confectionery.

To fulfill the consumers’ demands and needs, the company is functioning on reducing salt and sodium content in Maggi noodles by 10 per cent over the next 12-18 months. It 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.

Also Nestle will fast-track innovation and is looking at a double strategy of hyper localization and bringing in new products from its global portfolio including protein supplements. Narayanan said of the over 40 new products that were launched last year, about 10-15 per cent 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 per cent of the company’s reported growth in 2017, while 25 per cent growth came from new products.  The last couple of quarters have been fairly encouraging for the Indian arm of Swiss giant in terms of urban consumption, along with relatively stable commodity prices. Rural growth could be impacted by monsoons, but the company expects mid to high single growth.

 

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