Nestle India to strengthen 'rural play', optimistic on festival season sales

Nestle India, a FMCG major believes that although the ongoing festival season is expected to be positive for consumer goods companies, the next six months will be vital for a steady revival in consumption.
The government's recent move to slash corporate taxes is in right direction and the company is looking further strengthen its presence in rural markets. 

Suresh Narayanan, Chairman and Managing Director, Nestle India said, "Consumer goods companies are looking forward to the festival season as they are expected to see a bump in demand. But for me, what needs to be seen is the short- to medium-term and how the next six months evolve."

Narayanan added, "I have no reason to believe that the season will not be a good one, but this alone will not be an answer to the long-term secular issues of consumption that seems to be foremost in the minds of most people in the industry."

According to the report from market research firm Nielsen, the forecasted growth for the sector was cut to 9-10 per cent in 2019 from the previous forecast of 11-12 per cent.

Narayanan was present to commemorate ten years of Nestle Healthy Kids Programme, an initiative that focusses on raising health and wellness awareness.

Narayanan further added, "Corporate tax reduction is expected to translate into better earnings for companies which will hopefully translate into better dividends putting extra cash in the hands of shareholders. This is expected to have a positive impact on consumption."

The company believes that above average monsoons in 2019 could decrease growing pressures of high commodities prices.

Narayanan said that Nestle India currently draws about 25 per cent of sales from rural markets. It expects rural contribution to increase to about 30-35 per cent in the next 2-3 years. It will strengthen its rural play by launching low priced packs and rural-focussed innovations.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.