Nestle aims for expansion in rural markets in the next 2-3 years, reaching 1.2 lakh villages

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Suresh Narayanan chairman and managing director of FMCG giant Nestle on Friday said that Nestle will enter the fast-growing rural market and plans to expand to around 1.2 villages each having a population of more than 5000 in the next 2-3 years. The main changes for the rural market involve distribution expansion and portfolio tweaking. Additionally, to support the entry Nestle will initiate a communication thrust for messaging and advertising aimed at the rural population.

The small rural and semi-urban areas in comparison to the metros which are still struggling have shown greater resilience to the pandemic and performed better than metros. The company will work on renovating and innovating the products already available in the semi-urban and rural markets.

Nestle is expecting a recovery in urban markets is considering and evaluating Direct-to-Consumer (D2C) channels. As a third of Nestle’s business comes from urban areas the recovery of the same is of importance. Narayanan further stated that signs of recovery are shown by urban markets and expects the urban market to come back within the next one or two quarters. Due to the ongoing pandemic, the task of predicting whether the company will see double-digit growth is difficult. In the short run, the sales normalization is witnessed as pantry uploading during the server periods of the pandemic.

The possibility of a price hike due to an increase in costs is non-existent immediately. Further to offset some of the additional costs plans for procurement and cost efficiencies are laid out.

Nestle India is having sluggish growth in exports which is mainly attributed to the pandemic. US, Canada, Australia, and other markets have contributed to the increase in the Indian ethnic products such as Maggi Noodles, Masala Magic and the company hopes these markets open up further and be better contribute to the growth in terms of exports.

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