Talks with Chairman and Managing Director of Nestlé India Limited

“I would like to increase the size of our footprints and also the depth of our engagement with the Nepali consumer”

Suresh Narayanan is the Chairman and Managing Director — Nestlé India Limited. With over 30 years of rich experience in the FMCG industry, he is on the Board of Directors of Nestlé India Limited and was Chairman and CEO of Nestlé Philippines prior to joining Nestlé India in 2015.

He was in Nepal and spoke to Terence Lee of THT Perspectives about Nestlé’s long and fruitful relationship with Nepal and their plans for expansion. Excerpts:

Tell us about the purpose of this trip?

Well officially this is my first trip but I have been here before as a tourist some 20 years ago, and it was a Nepal that was very different. I am here to be with the team in Nepal that has done a commendable job of the Nestle business and to make an assessment of what we should be doing for the future.

Could you comment on the kind of footprints Nestle has made in Nepal?

I understand from our importer here that the relationship with Nepal is over 70 years old. In fact, at that time Nestle products were being imported from Australia into the country as this was before we had the manufacturing facilities in India. So it’s a very old relationship. I think in more recent times our footprints started with Nescafe and Maggi in 1982 and 1983 respectively, of course, subsequently it has transcended to other brands of Nestle like Everyday and Kit Kat somewhere in the 90s. The evolution of Nestle has been with the consumer in Nepal and it’s a very steady and cherished relationship of growth that we have seen in this market.

Nestle has a huge number of brands but not all are available in Nepal. Can we expect an expansion with new products in Nepal?

Broadly our portfolio covers four key categories. We have the milk and nutrition business, the chocolate and confectionary business, the business in coffee and beverages and the culinary foods with brands such as Maggi. We have covered this and in addition, we have our out of home business called Nestle professional. Therefore, in all we broadly have a good representation of our brands in Nepal.

In the recent past, as a company we have launched close to 30 new products, and as I speak to you many of these brands are on their way to Nepal. What we like to do is really three things. One is to offer our brands that have the highest food quality and safety as well as nutrition credentials to consumers in Nepal. Number two is to contemporise the offerings and what we offer Nepali consumers. Here on average more than 60 per cent of income is spent on food, so therefore, we believe that we have role to play in that. So there will be more contemporary offerings. The third thing is to expand the footprint of Nestle in the out of home segment. Nepal is strong on tourism and with time I hope there will be an improvement in the overall level of tourism in the country as that gives the opportunity for many of our brands.

How do you view the Nepali market and what kind of competition do you see here?

I would characterise the market by two things, one is that in the recent past,there has been a period of growth and we have grown as a business which is a positive trend. The second is a bit of psychographics of the Nepali consumer that I have noticed in this short visit, in that, the Nepali consumer not only seeks good value but they also seek quality, good taste and good nutrition.

Some of the brands I see on the shelves in Nepal are fairly expensive brands, but consumers are willing to pay for those brands. That is the heartening part for Nestle. To be able to market to consumers who understand good value and good nutrition and that’s the joy for companies like Nestle.

In the near future will we be seeing more aggressive marketing and branding of Nestle products? 

I look forward to a greater degree ofengagement with the Nepali consumers. Local advertising is something we have not done in the past but now we have some of our advertisements translated and put in place for the Nepali consumer. I see that this will bring greater traction and connectivity with the consumer and a greater sense of belonging to the brand in the local context.

We will be looking at this more aggressively and I would like to increase the size of our footprints and also

the depth of our engagement with the Nepali consumer.

Will there be change and expansion in terms of distributors and distribution network?

We have three primary importers who have been with us for a long time. One of the values of Nestle is not only in the value of ethical relationships but also relationships of long tenure. We will have this relationship with our three importers and we are very proud of what we have achieved. Obviously the expectations from them and from the distributors downstream will increase as our footprint increases. For example our ready to drink coffee was just released in India and it is now in Nepal as well. This will demand a level of distribution and a pace of distribution that is different from our other products. So we will look at focusing our energies on expanding this and making sure we have the relevant competencies. My team here will perform that task in the coming days.

I think also the urbanisation phenomenon is apparent in Nepal. Our portfolio is also in a sense urban biased and as Nepal progresses on this path, Nestle will be a partner in terms of offering whatever we can to enhance the lives of consumers.

Nepal is the home of established noodle brands. How do you see Maggi faring in such huge competition?

Firstly I would like to take the opportunity to express my admiration and respect for competition. Obviously each competitor has a significant offering. Maggi has been very strong for the last 30 odd years in India and has been a pioneer in instant noodles in the sub-continent.

I believe we have a strong offering not only in terms of taste and nutrition but also in terms of variety. We would take this as a sign of progress to offer greater variety and also try to contemporise the Maggi offering to the needs of the Nepali consumer. Over a period of time we have ambitious plans in this direction even though the competition is well entrenched and we realise that the task is not going to be easy. Ultimately the consumer will decide whether or not Maggi is a brand of choice as indeed in India after the crisis, we have come back to market leadership. That shows that the consumer has a place in their heart and stomach for the Maggi brand.

What plans do you have for competition in the chocolate segment?

We will be engaging more with chocolates. In fact in the last couple of month launched new offerings. Clearly speaking we have a good position and we will be getting more aggressive in the chocolate and confectionary space. Overall I can tell you that the degree of engagement with Nepali consumers will undergo an increase in the coming period.

As I see it, we as a company enjoy a good position in the market and our brands are respected and the Nepali consumer is willing to buy brands of high quality and value and that’s a good signal for us. Our portfolio will continue to expand beyond the four segments I talked about and we are constantly evaluating business opportunities in Nepal and at some stage if we can engage the country more in terms of sourcing or manufacturing we would be happy to do that as it is a part of our DNA to involve ourselves to a greater extent with the community.

The longevity of Nestle for 150 years has not been based only on our brands but also our involvement with farmers, dairy farmers and others and we will look at our engagements in Nepal to see how we can use some of our platforms to increase the bonds of relationships with Nepalis.