Swiss foods maker Nestle SA’s global chief executive Mark Schneider said the adoption of AI (artificial intelligence) by its India unit is now being taken to world markets and that it has led to customizing consumer choices and planning new launches.
“We are using AI in India to assess multiple types of data that give insights down to a postal code and demographic level. This level of customization has benefited us as well as our customers and consumers,” Schneider said.
He said the company has “now scaled this capability and rolled it out to several other markets worldwide”. Stating that in each of these markets, Nestle is seeing tangible gains, he said in his address that the maker of Maggi noodles and Nescafe coffee is “proposing a basket of products targeted to stores in different neighbourhoods” based on the AI insights. Nestle India, which follows a calendar year, said that it has launched more than 110 new products in the past seven years and that new products contribute 5.4% to the company’s domestic sales.
Schneider said the company is looking at turning digitalization into a source of competitive advantage across its value chain, in the sourcing of raw materials, product development, manufacturing, operations, sales, pricing, and distribution. In its annual report for 2022, Nestle said that growth in India was being driven by key price points and increasing distribution in small shops.
The company gave the example of its Munch chocolate brand in India, which it said worked through affordable “price point management. The food maker, which follows a rurban (rural-urban) growth strategy, expanded its direct distribution to 1.5 million outlets last calendar year. The company said it increased its total direct and indirect distribution network to 5.1 million outlets in 2022, up from four million outlets previously.
The company said in a management commentary that it will follow penetration-led volume growth and that it is sharpening its geographic focus, increasing distribution points, and going deeper into smaller towns and cities.
In 2022, Nestlé’s sales increased 14.8% year-on-year to ₹16,790 crore, aided by out-of-home demand making a strong comeback.