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Plan to invest ₹5k crore in India by 2025 vs ₹8k crore over last 60 yrs: Nestle CEO Mark Schneider

New Delhi: India is in an advantageous position compared to other large economies when it comes to dealing with inflation, because there is a strong underlying demand from the rising middle class and people reaching higher levels of income, which kind of overpowers some of the concerns that come from inflation, Nestle SA’s global chief executive Mark Schneider said.

“Inflation concerns are real globally, and at some point they also have a dampening effect on demand. But I think India is less touched than many other large markets because of this economic growth,” he said.

In India along with the global board at the company’s headquarters in Gurgaon – where the world’s largest packaged foods company held its first physical global board meet after the pandemic – Schneider said: “We are committed to responsible pricing and keeping products affordable for all strata in India. There is no point in a perfect product that no one can afford”.

capex callThe maker of Maggi noodles, Nescafe coffee and KitKat chocolate plans to infuse fresh investments of ₹5,000 crore in India in the next three years till 2025, on capital expenditure, manufacturing, product development, acquisitions and expansion of its product portfolio. The investment, subject to clearances and approvals, will also help in creating more jobs, he said. Nestle, which currently operates nine plants across India, is also looking at new locations to set up manufacturing capacity. “When you look at the investment plan through 2025, we are talking about ₹5,000 crore and that compares to ₹8,000 crore over the last 60 years when we started manufacturing in this country,” Schneider said.

Nestle India chairman Suresh Narayanan said the investments would be secular across categories. “These are the ambitions we have as a company… we are probably looking at new locations for factories as well,” Narayanan said.

India, a top 10 market for Nestle SA, is not just a market for selling products, but also one where it wants to develop products for international markets, said Schneider, who has spent a week here visiting retailers and the company’s research and development centre in Manesar, Gurgaon.

He said there is a large opportunity for “zip code”(or regional) marketing and that the “biggest difference” from his last visit to India before the pandemic has been that digitisation has taken off. “You can get retailers’ data, zip code by zip code, and then you put a product in front of them,” he said.

Nestle India, which follows a January-December financial year, reported revenues of ₹14,709.41 crore in 2021.

Schneider said India is one of the fastest markets worldwide in overcoming pandemic challenges. “The bounceback from the pandemic situation has been impressive in India… you could not have done that without significant progress in vaccination at scale because we are talking about a billion-plus people.”

On whether the company is pursuing mergers and acquisitions, Schinder said: “If we see interesting opportunities, we will be very happy to explore those… But these are hard to plan, you have to see if there’s a good fit”.

Globally, inflation has been at an all-time high, led by food, fuel and energy, amid Covid-induced global supply chain disruptions and shortages.

Governments across the world need to bring inflation under control because that “takes away people’s wealth”, Scheinder said. “We see many central banks being a little late in their response to inflation… rising interest rates dampen investments and bring down asset values, but it’s needed,” he said.

“What we need to do globally is to bring inflation under control where we don’t have significant distortions that come from inflation… it is a major economic concern and it is back with such a vengeance,” Schneider added.

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