Nestlé takes balanced view in India

11 January 2012

NEW DELHI: Nestlé, the food group, is pursuing a policy of "pragmatic bullishness" in India, balancing expenditure on innovation and enhancing its capabilities with rigorous scenario planning.

Official estimates suggest India's economy will expand by 7% this year, well ahead of advanced markets, but lagging behind the double-digit pace of recent years. Nestlé, however, remains positive.

"From my point of view, India has been a growth story and will continue to be a growth story," Nandu Nandkishore, its zone director, Asia, Oceania, Africa and the Middle East, told CNBC-18. "I am not going to let up the pressure."

Over the last three years, Nestlé has logged local annual growth rates of 25%, and the company spent $500m in India from 2010-11 to build capacity, especially in sectors like noodles and confectionery.

"So, because the capacity is available you would expect that a lot of the pent-up demand that could not be fulfilled can now be fulfilled. So that's a strong argument for the continuation of the growth story," Nandkishore said.

Despite its positivity, Nandkishore asserted that the possibility of an economic and consumption slowdown required an adaptable model.

He said: "We are fundamentally optimistic but the pragmatism says yes, be optimistic, yes invest, yes be bullish, but don't get too far ahead of market demand. So you just have enough flexibility to grow."

"The phrase that has been used with me is one of 'pragmatic bullishness', which is a very good phase."

Alongside championing leading brands like Maggi noodles and stock cubes, Nescafé coffee and Kit Kat chocolate, Nestlé is considering a wide range of potential segments in which to launch products.

"I think the logic there to look at in theory is that all options are open," said Nandkishore.

"The local management would have to pick very carefully, which new categories they enter in a manner that doesn't jeopardise the growth in the existing businesses."

Data sourced from CNBC-18; additional content by Warc staff