Nestle India Chairman and Managing Director Suresh Narayanan said that the company is on a path to accelerated growth in rural areas and is increasing its reach in what it calls as ‘rurban’ – a combination of rural and semi-urban areas. “When there is a big question on rural India and rural growth, I do admit that rural play of Nestle is only 20 per cent but you see the growth has been around 25 per cent to 26 per cent. Again, rural India for Nestle India is resonating and we are on a path to accelerated growth in rural markets as well,” Narayanan told analysts in an earnings call.

He further said that distribution will be key in achieving the growth. “In 2022, we accelerated our Nestle direct reach from 1.4 million to 1.5 million, overall reach at 5.1 million,” he added. Nestle’s expansive reach had shrunk quite considerably in 2015 after the Maggi crisis, he said, adding that the company has ‘built back on these years and now it is fully complete’.

Talking about the challenges in ‘rurban’ markets, Narayanan said, “In towns of less than 1 lakh population, the growth was still positive but has come down from 13 per cent to 5 per cent.” He added that the growth continues to be in double digits in mega cities even as there has been a decline. While he maintained that the dip in the market has been from 23 per cent to 12 per cent, as a consequence of small pack sales, Narayanan maintained, “I do not see a cause of concern.”

Nestle CMD also talked about high commodity prices and said that the FMCG firm is confident of mitigating it partially. “We are confident of mitigating a part of it. We are confident of being taken care of by some additional opportunities for growth. Premiumisation and upgrading would come too. There is considerably still some pressure under the bonnet as far as wheat prices are concerned,” he said. Nestle India on Thursday reported a sharp 66 per cent year-on-year increase in its net profit to Rs 628 crore for the quarter ended December, supported by volume and mix-led growth.

Globally as well, the FMCG company has shown concerns on commodity prices. According to Reuters, Nestle Chief Executive Mark Schneider on Thursday said that the group will lift prices again this year after more costly ingredients contributed to making its 2022 profit miss market forecasts. Schneider maintained that further price hikes were necessary to offset the impact of increased commodity prices. Nestle, had in 2022, raised prices by 8.2 per cent but that failed to fully offset the impact of increased costs on margins.

Earlier, Unilever had said that it would increase the prices for its detergents, soaps and packaged food to offset rising input costs. However, it had also maintained that it would ease those hikes in the second half of 2023.