- Nestlé India warns of a near-term demand slowdown amid inflation pressures.
- The company described overall consumption and food and beverage industry growth as a watch-out in the short term.
- The maker of Maggi, Nescafé and KitKat reported a sharp jump in June quarter earnings, with revenue rising by around 25 per cent year-on-year to about ₹ 6,378 crore and net profit increasing by nearly 48 per cent to approximately ₹ 975 crore.
- Rural markets showed resilience, with demand continuing to outpace urban consumption; Nestlé’s distribution network reached nearly 6.2 million retail outlets and about 219,700 villages, leaving scope to deepen rural penetration.
- Premium products and digital commerce are emerging as growth drivers; Nestlé said its premium portfolio increased from 11 per cent to 14 per cent of sales, with quick commerce and e-commerce accelerating product launches and strengthening its urban presence.
- Maggi, Nescafé and KitKat continue to have household penetration in the mid-50 per cent range, leaving ample room for further expansion.
Nestlé India has expressed concerns over a near-term slowdown in demand for its food and beverage products, attributing this to inflationary pressures stemming from the ongoing conflict in West Asia and potential impacts from an El Niño-induced weak monsoon.1
During an analyst call following the company’s June quarter results, Manish Tiwary, chairman and managing director, indicated that market growth is already showing signs of slowing, with industry data reflecting weaker demand. He stated, "Food inflation had started affecting the market," highlighting the rising costs of energy, packaging materials, edible oils, and shipping as significant pressures on the business.3
The company noted that the conflict in West Asia has disrupted shipping routes, contributing to increased input costs across the supply chain. Despite these challenges, Tiwary remains optimistic about the company’s long-term growth prospects, citing factors such as low category penetration, premiumisation, and rising rural demand.
In the June quarter, Nestlé reported a remarkable revenue increase of around 25% year-on-year, reaching approximately Rs 6,378 crore, while net profit surged nearly 48% to about Rs 975 crore. The company also emphasized the resilience of rural markets, where demand continues to outpace urban consumption.45
Tiwary noted that Nestlé’s distribution network has expanded significantly, reaching nearly 6.2 million retail outlets and about 219,700 villages, with considerable scope for deeper rural penetration. The premium portfolio has also grown from 11% to 14% of sales, aided by quick commerce and e-commerce initiatives.
“Despite the slowing demand outlook, Nestlé India's June quarter earnings jumped, with revenue up about 25% year-on-year to ₹6,378 crore and net profit up nearly 48% to ₹975 crore. Rural demand continues to outpace urban consumption, while distribution reaches nearly 6.2 million retail outlets and about 219,700 villages.”
