Nestle is a Swiss multinational conglomerate operating worldwide and initiatedits business in India under the name of Nestle India in 1956. Nestlé’s association with India goes back to 1912, when it commenced exchanging as The Nestlé Anglo-Swiss Condensed Milk Company (Export) Limited, importing and offeringproducts in, breakfast cereals, chocolates and confectionery, nutrition foods ,beverages ,dairy, as well as food and vending services.Popular productssuch as Nescafe,Maggi,KitKat, Polo, and Milkmaid, fall under Nestle India’s portfolio and has
constructed a unique brand image for itself through ingenious marketing drive and approach that has created a robust brand connection among consumers even in this progressively digitized world.
Nestlé’s Target Audience
Nestle India has positioned its wide range of product offerings covering audiences from 2-year-olds to working-class professionals based on age demographics.
| A Demographics-wise Breakdown of Nestlé’s Offerings | |
| Demographics | Products |
| Kids | Koko Krunch, Lactogrow, Ceregrow |
| General Audience | KitKat, Milkmaid, Maggi |
| Working Professionals and above | Nescafe, Protein Products, Sunrise |
Today, Nestle India has a firm presence in the FMCG sector and relisha healthy market share in the food and beverage industry.Nestlé’spositioning and targeting approach have played a crucial role in establishing itself all around the world and has also positioned its products to cater to the Indian ruralaudience.
Nestle company’s appetite for growth and its new found fervor is aiming to grow its business by digging deeper into the rural markets and has placed its bet on the vast hinterlands as growth in the urban market is slowing. For the past three years, company business is growing by double digits and in the next three years it has decided to grow its rural footprint at least by a third.
Nestle India is all set to tighten its hold in itssemi urban and rural markets and aggressively expanding its footprint in the rural markets,because of the subdued growth in the urban markets. Its planning to reach around 1.2 lakh villages in next two-three years with each having population of over 5,000.This will be done through distribution expansion, targeted products .campaigns and some twist in portfolio. Nestle is renovating and innovating some products and planning a communication thrust for advertising,campaigns and messaging to support this move in the rural arena. Also arduousto reach its customers at their doorsteps by activelyevaluating Direct to Consumer (D2C) channelsproviding vying offering over other channels to access smaller markets.
Nestlehas plan in terms of procurement and cost efficienciesto mitigate some of the commodity cost increase and has ruled out any immediate price hike due to higher costs.In 2017 rural reach of Nestle was roughly about 1,000 villages in the country and that number reached to almost 89,000 in 2019.
In comparison to the big metros, which are still struggling,small rural and semi-urban areas of tier II, III, and IVhave performed much better and have shown a larger resilience against the pandemic. But after closet uploading during the drastic periods of the pandemic the company is witnessing normalization in sales in the last couple of quarters.
In the last 4-5 years Nestle has launched almost 80 new products and work is being done on 40 to 50 projects which are on the anvil. New products were launched during the pandemic too but the pace was not aggressive. Though during the entire period of the pandemic rural markets have shown accelerated growth and the company’s overall domestic sales increased by about 10% in the December quarter while growth in the urban market stood at 6%, rural sales growth was almost twofold of that.
Nestle feels rural India and semi-urban India were areas to watch out as there will be an increasing preilection towards the consumption of branded and packaged goods, and India is expected to add almost 140 million households to the aspiring and the affluent class in the country in between 2018-19 and 2030.Hence thebottom of the pyramid, who are deprived, is going to shrink.
Nestle By consolidating its initial market focus to just a handful of key brands, which can streamline life, curtail risk, and concentrate its marketing support and managerial push on a limited number of important niches. Nestlé’s growth strategy had been to enter rural markets early before competitors – and build a considerable position by sale of basic food items that appeal to the rural population, such as condensed milk, infant formula, Maggi etc. The aim is to build a dominant market position in the rural arena.
Discussions:
- Should Nestlefocus on rural markets in order to improve their performance? Why?
- With regard to business development what should be the company’s strategy in rural markets?
- Does Nestlé have capacity to grow in rural Markets?
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