Nestle looks to diversify into premium coffee, cereals

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NEW DELHI: Out of Maggi crisis, FMCG firm Nestle India, is looking to diversify into new segments like premium coffee business, pet care, skin health and cereals while it looks at 2017 as a “year of aggression”.

It is also planning consolidating its offerings and adding new categories so as continue with double digit growth.

“There are so many categories in which we are not in. We don’t have a premium coffee business. Expresso and dolce gusto is not here. Our pet care is not here. Cereals is not here, in healthcare we are here but its very small. Skin health we are here but its relatively very small. These are potentially the businesses,” Nestle India CMD Suresh Narayan

The company, as part of diversification, has launched 35 products in last six months and may remove some of those which are not performing well.

“I would see consolidating of the portfolio, removing some which we believe that its not working or its too small, adding some and probably preparing ourself for the new categories,” Narayan said at a roundtable discussion here.

Nestle, which now owns skin care brand Galderma, is also planning to be a player in the segment.

“In India, we have relatively small presence…and there are plans to expand that portfolio as well,” he said, adding that “these are going to be more specialised products”.

Galderma was earlier a JV between Nestle and L’Oreal and then few years back it acquired stake from French cosmetics company and made it Nestle Skin Health

“On health side, we have a wide range globally and India side we are only one product used for post operative care. But there is a whole range,” he said.

On being asked that whether Nestle would cross Rs 10,000 crore sales mark in 2017, Narayanan said: “Nothing is impossible. We would continue double digit growth. Let’s hope that it may happen.”

For 2016, Nestle’s net sales were up 12.75 per cent to Rs 9,159.28 crore as against Rs 8,123.27 crore a year ago.

“I would like to call it as year of aggression with purpose,” Narayanan said.

On whether Nestle would introduce new brands here, Narayanan said: “Yes. New categories means new brands as well.”

The company would also expand more offering in snacking category under Maggi brand.

“You would find more offering in Maggi coming whether in the traditional noodles route or it would be value up of noodles as well,” he said.

In 2016 Maggi contributed 25 per cent of Nestle’s total sales, which was down from 30 per cent of pre-crisis period. In 2015, Maggi was banned on allegations of high led content and presence of MSG in the snack, hitting the company sales.

Contribution from chocolates last year was around 15 per cent.

“I would be happy with 25 per cent coming out from Maggi over the year, that’s the goal. I do not want to substantially delink it and the reason why new products have been launched to buffeting in the game. Now chocolates and confectionery is adding more and growing every quarter,” he said.