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Nestle expanding packaged foods segment

Packaged foods firm Nestle has said likely new categories by adding to its product portfolio and could foray into in India could include water and pet care. “These are very much on the radar in terms of India and we will evaluate their potential,” the maker of Maggi noodles, Cerelac infant food and KitKat chocolates said in an investors’ presentation. The India arm of the Swiss foods major said while it has passed on price cuts in dairy whiteners, sauces and infant cereals to consumers following lower tax slabs announced in the Goods & Services Tax on July 1, it will “have to pass on” increases in confectionery and coffee on account of higher taxation slabs. “GST has been relatively smooth and 3,500 suppliers and 1,600 distributors had to be recalibrated across one million outlets, though there is still some reluctance in wholesale to pick up,” Nestle said, while briefing analysts, adding that the June quarter was impacted because of destocking. The company said about half of its growth now comes from its non-noodles portfolio, and that it will focus now on driving double digit volume growth, sustaining profitability, and fortified products across categories. For the quarter ended June 2017, Nestle had reported net profit increase of 10% at Rs 263 crore, which it said got impacted on account of higher cost of materials. Faced with a trend towards healthier eating, makers of packaged foods are seeking to win back consumers’ favour by reducing sugar, salt and fat in their products and to reassure worried investors by improving efficiency and cutting costs. Nestle reflected difficulties in the sector when it said it expected 2017 sales growth to be “in the lower half” of its 2 to 4 percent target range. Schneider, who has launched a 20 billion franc share buyback and is expected to unveil more details of his strategy at an investor day in September, said he was disappointed.

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