Nestle hopes worst of inflation is over but finds spelling out 2023 outlook difficult

Fast-moving consumer goods (FMCG) firm Nestle India hopes that the worst of inflation is behind it but it would be premature to foretell if 2023 would be easier compared to 2022, the firm’s CMD Suresh Narayanan said on Tuesday.

Milk, wheat and a few other commodities are showing very firm trends, he told CNBC-TV18, and added that there has been inflation on softening in some parts at the moment.

“If some of the trends that are there today continue, then hopefully it will be a better year as compared to the rather unprecedented levels of food inflation that we had in 2022,” he said.

Meanwhile, Narayanan reiterated that Nestle’s rural footprint is lower. “Therefore, some of the pain that some (other companies) might be having in terms of shrinking rural demand that they might have faced in the last couple of quarters, is not entirely true for me. So it continues the same way,” he said.

He added that the FMCG major’s 'rurban' strategy has been put to a lot of execution in the last couple quarters as it has expanded the number of villages it is distributing in, which is part of a long march.

Nestle CMD highlighted that the company is testing a direct-to-consumer (D2C) platform in Delhi NCR, which is more of a consumer experience and service platform and not a large revenue generator.

“We have fairly strong brands of our own that are relevant for our target consumers and that's how we will approach it for now,” he said.

Nestle, which operates with brands such as Maggi, Kit-kat and Nescafe, witnessed the highest sales growth during the July to September quarter in the last five years. Its profit for the quarter was up 8.25 percent to Rs 668.34 crore and sales at Rs 4,591 crore, up 18.24 percent.