Nestle India, a leading player in the Fast-Moving Consumer Goods (FMCG) sector, is anticipating a surge in demand for its products in 2024. Despite the challenges faced by the industry, the company remains optimistic about the future.
Nestle India’s Chairman and Managing Director, Suresh Narayanan, acknowledged the stress points in the FMCG sector, including job losses and food inflation. The recent festive season did not yield the expected sales boost, partly due to the unpredictability of food inflation. However, Nestle India remains confident in the long-term growth prospects of the industry.
The government’s commitment to infrastructure investment, amounting to Rs 11 trillion, is expected to fuel job creation and household incomes, leading to increased consumption of essential products. Despite overall inflation levels being down compared to previous years, stability in commodity prices is expected to drive an uptick in consumption. The upcoming Lok Sabha elections in India are anticipated to boost economic activity and liquidity in the market, potentially reviving demand, especially in mainstream categories.
Nestle India has outlined its growth strategy, focusing on penetration-led expansion and investing in capacity expansion. The company aims to deliver 11-12% revenue growth in 2024 on a high base. Nestle India plans to invest Rs 6,500 crore in capacity expansion over the next five years, the highest investment in such a timeframe for the company.
Nestle India is gradually making inroads into rural areas, where its market share is not as strong. Currently, about 20% of the company’s revenue comes from rural markets, and this figure is expected to rise to 25% in the future. Nestle India has doubled stocking points and expanded its direct coverage to over 190,000 villages to leverage the demand in rural areas.
RTM Watch’s Take
Nestle India’s positive outlook for 2024 reflects its confidence in the Indian market and its commitment to investing in the country’s future. Despite the challenges faced by the FMCG sector, the company’s strategic focus on penetrating deeper into tier 2-5 markets and capacity expansion positions it well to meet the anticipated demand . As Nestle India continues to adapt and innovate, it will play a critical role in shaping the FMCG landscape in India.
