Manesar, Sep 6 (PTI) FMCG major Nestle India today said it is consolidating product portfolio to focus on performing brands, having introduced 43 products following the Maggi crisis about two year ago.
The company is in the process of reviewing products in chocolate, confectionery, coffee, milk and some other segments, which were launched 15-18 months ago as part of its drive to introduce ‘innovation-based’ products.
“Now we are in the process to see what is working and what is not working. We cannot support so many products going forward,” Nestle India CMD Suresh Narayanan told reporters here.
He said the company will take stock of brands, which are performing well in some regions or at national level or even at some channels.
“You need to prioritise on what you need to focus on, and that core exercise is happening,” he added.
Post Maggi crisis in 2015, Nestle had ramped up innovations to expand its portfolio beyond the noodles business, which contributed over one third of its total sales.
“The process is now happening because 12 to 15 months of exercise has taken place and that’s really what we are in,” Narayanan said, adding that the next step could not “happen without looking what you have in the plate”.
However, he also added that many of the categories have a long way to go in terms of penetration.
“Along with consolidations, the fundamental core of the company strategy is to increase penetration and go for volume growth,” Narayanan said.
The company is expecting to continue its volume-led growth, however, its value would decline because of GST, he said.
“In the GST now, the excise duty is subsumed into GST itself and it hits the sales side straight away. As a company on average about 525 basis points of sales would be reduced,” he said, adding, “if it was about to grow 10 per cent, this could show 4.75 per cent”.
This would carry on till June quarter next year, Narayanan said.
“It’s fair to say that in month of June there was delay in purchasing and downstocking. In our case, I believe that roughly on the quarter, I would say we had impact of around 200 basis points,” he said.
This is published unedited from the PTI feed.