'We will keep the consumer at the centre, use technology to optimise, and continue investing behind brands to drive volume-led penetration'

“Our strategy has always been to focus on volume-led penetration growth,” said Manish Tiwary, chairman and managing director, Nestlé India.

Nestlé India delivered double-digit volume growth and its highest ever domestic sales during the January-March quarter and will continue to focus on volume-led penetration growth. In a video interview, Manish Tiwary, chairman and managing director, speaks with Sharleen D’Souza/Business Standard about focusing on innovation while pushing for higher rural reach.

How sustainable is this, especially given the high base, and what is your strategy to continue driving growth?

Our strategy has always been to focus on volume-led penetration growth. In businesses such as noodles and coffee — excluding confectionery where we are not the largest player where it is more of a share game — we are the market leaders.

We help define those categories, so it is important that we keep driving penetration.

To achieve this, we also continued investing behind our brands.

Advertising grew by more than 50 per cent in Q4 and by more than 40 per cent in Q3.

One of the things we control, and which has helped us grow faster, is brand investment.

This investment is built on a few pillars.

Going forward, the same two factors remain relevant.

One is the macroeconomic environment, which we do not control.

There is a lot of volatility in the market right now because of the West Asia situation, inflation, weak monsoon, and fertiliser costs.

If inflation rises — whether in fuel, packaging material, or commodities — and if the monsoon is weak, it becomes harder for our consumers.

We, therefore, have to work harder to protect that value.

We will continue to invest in our approach. It is difficult to forecast how long double-digit growth will continue, but I would rather focus on the things we can control.

Market momentum and the macro environment are not fully in our control, but the way we run the business will not change: We will keep the consumer at the centre, use technology to optimise, and continue investing behind brands to drive volume-led penetration.

Navigating Macroeconomic Challenges

How do you see demand panning out, and how do you think Nestlé India will handle macro issues that may arise in FY27?

There are signs of slowdown being reported by Nielsen, but because the market is so complex and there is uncertainty around the West Asia situation and its downstream impact, along with monsoon uncertainty, it is hard to know the full effect.

There are too many variables.

However, as a company, it is not as if our categories have 100 per cent massive penetration.

Our job is to keep driving cost optimisation programmes.

Yes, there could be a couple of quarters of slower growth, but it would not change our strategy of volume-led growth and brand investment.

I still see enough headroom to grow in a secular manner.

Evolving Channel Mix and Rural Focus

How is your channel mix changing between general trade, modern trade, ecommerce, and quick commerce?

At this point, two channels are growing faster for us — Quick commerce and rural. Quick commerce is growing well partly because of supply-side expansion, including new drug stores and new players like Minutes and Amazon Now.

There is a lot of increase on the supply side, and therefore, the growth is strong.

We are also seeing higher-than-overall growth in rural, which is a focus channel for us.

As part of our overall strategy, we are focusing on both ends of the market.

General trade still remains the heart of our business in terms of contribution, and there too we are seeing strong traction.

So right now, all channels are positive, but quick commerce and rural are growing faster than the rest.

Nestlé India has been pushing rural penetration. Where do you stand today, and do you see the rural-urban split changing any time soon?

What is important is that we are a foods company, so we want consumers to receive our products fresh and in good condition.

That is why we have always believed in, what I call, controlled distribution.

We try to use channels where we can directly control the quality and freshness of our products, because if products are allowed to flow through other systems, there could be expiry and other issues, which would be completely unacceptable for us. Five years ago, we were largely urban.

Then we moved into smaller cities, and now we are moving into rural markets.

For me and the team, controlled distribution is very important.

It is not a vanity number. It is not about saying we reach ‘X’ million outlets, because I would not want my consumers to have a bad experience in a store, and in the foods business you cannot afford that.

Our distribution points — distributors, rural distributors, and wholesale hubs — have moved from around 25,000 to 45,000 in the last 12 to 15 months.

Think of them as spokes. We had 25,000 spokes all over the country; we now have 45,000 spokes.

From there, we are pushing distribution further down.

At this point, we are covering around 220,000 villages, up from more than 2,000 earlier.

What is exciting for me is that, using technology, I now have as good a view of freshness and product quality in rural as I do in urban markets.

So the pieces are coming together: the right pack mix, the right marketing strategy, and the right route to market.

Going forward, I see rural growing faster for us as penetration levels remain very low.

I see ecommerce growing faster because of the supply side.

What is very important, however, is that I do not want a situation where rural’s share rises only because urban is not growing... Rural should grow faster, but urban should also continue growing.

So I see faster growth from ecommerce, faster growth in rural, and general trade remaining the core of the market.

Commitment to Margins and Investment

Do you expect the current margin level to continue?

I cannot give a forward-looking view on margins, but the strategy behind the business will continue: volume-led growth and brand investment.

You have seen that over the last three quarters, and there is no reason for us to change it.

I would never take a shortcut on brand investment or innovation investment, because that is at the heart of what we do.