Volatile food inflation a concern: Nestle India CMD

NEW DELHI: Food inflation will continue to “wobble” for some time and it is a phenomenon that companies should be worried about, Suresh Narayanan, chairman and managing director at Nestle India, said on Friday. Changing climate conditions, uncertainty related to El Nino, and fluctuations in prices of commodities continue to pose challenges for businesses, he added.

In its June quarter results announced earlier this week, Nestle India said that while fuel prices have softened and commodities such as edible oils, wheat and packaging materials have been in the lower price range, robusta (coffee beans) prices remain elevated. “Coffee prices are up by almost 50-60%… it is a significant part of my portfolio,” Narayanan said.
Despite operating amid an environment which Narayanan described as equal parts “promising” and “turbulent”, the fast moving consumer goods (FMCG) major has improved its market share across categories, helped partially by the premiumisation trend. “In categories like coffee, noodles and chocolates, we have had market share improvement,” Narayanan said, adding that premium offering Nescafe Gold is one of the company’s fastest growing brands. While discretionary spending in urban India is higher, the younger population in rural India is experimenting with products. “This seeking out of new taste experiences is what will fuel Nestle for the future or any food company for the future,” he said.

The company will invest Rs 4,200 crore in the Indian market through 2023-25. The bulk of it will be used to expand the capacity of its factories. “The new Odisha factory will be looked at as a noodles factory at this stage and we will also consider chocolates and confectionery as part of it… there are two kinds of capex we look at in the company. One is compliance-led and the other capacity-led. Most of it is capacity led as we see that the underlying demand is very robust,” Narayanan said.