Nestle is about to open its international R& D centre in Manesar,India. The company plans to bring out more new products in different categories. According to Nandu Nandkishore, executive vice president of Nestle S.A., the company will focus on innovation to cater to the affluent section and will take care of the price-point challenge when it comes to the rural areas.
Nestlé’s investment in India
The Switzerland-based company has 40 % of its business contributed by emerging markets and aims at obtaining 50 percent contribution from these markets by the end of 2020. However,India contributes less than 2 percent to the company’s business. Nestle plans to work harder and introduce innovations to increase this share in India. The last three years had given Nestle considerable growth momentum in the country with more than 20 % growth in the last 26 quarters.
Nestle has invested about $500 million dollars in the Indian market during the last three years in order to create a market for products such as coffee, chocolates, noodles etc. The company now intends to make use of these products in order to drive innovation for growth in the next one year. The company has an investment planning process for India up its sleeve now.
Nestlé’s plans for affluent India
Nestlé’s challenges in India is from two big markets- the semi-urban or rural and the affluent. The company has a price-point challenge when it comes to dealing with the semi-urban or rural category and has been quite successful in dealing with it till now. Nestlé’s offering of Rs. 2, Rs. 5 and Rs. 10 packets have helped the company drive this particular market. However, the company finds it difficult to cater to the emerging affluent section as this requires more innovation rather than focus on prices.
Targeting the emerging affluent section, Nestle plans to dish out premium offerings to the market such as chocolates, coffee, premium noodles etc. The company is also contemplating the introduction of Nescafe dolce gusto, a coffee machine system offering a coffee shop experience at home, in the Indian market.
Nestle and competition
Nestle launched chocolates in India for the first time in 1990. Back then, Cadbury had a 96 percent market share. At present, Nestle has about a quarter of the market share. There are possibilities of new chocolates being introduced by the company too.
In spite of Nestlé’s challenges in India, the company has come a long way in the country. With the inauguration of the R & D plant at Manesar, the company will conduct research by partnering with a couple of universities and plans to come up with new and improved products in nutrition and noodles.