Nestle says rate increase on the cards if headwinds of commodity price hike continues

With prices of raw materials such as milk and wheat on upward swing, FMCG major Nestle may increase prices of certain dairy products in the near future. “By and large we have been successful in mitigating it [price hike] wherever it is possible, but if the trend of unrelenting increases does happen, then obviously we will be forced to take our prices up,” Suresh Narayanan, CMD, Nestle India told CNBC TV-18 in an interview. However, the company has been resisting price increases as its strategy is driven by penetration-led volume growth, he added. Nestle sells various yoghurt variants, ready to drink beverages, milk, and ghee products under its dairy portfolio. 

Talking about the FMCG slowdown that has been plaguing the industry for close to a year now, Suresh Narayanan said that while government has deployed many measures to tackle the slowdown, “if there are measures that put some money back with consumers in terms of increased consumption expenditure, that should really help us,” he said in the interview to the news channel. 

Fast-moving consumer goods companies are deploying new tactics to sell their products to more discerning consumers, as the consumption slowdown continues and e-commerce causes disruption. Speaking at the CII National FMCG Summit, Suresh Narayanan said that the industry must acknowledge the change happening in FMCG sector and respond to the new realities, Financial Express reported. 

Meanwhile, the Swedish FMCG company has been slapped with Rs 90 crore fine by anti-profiteering regulator NAA. The maker of Maggi noodles Nestle’s methods pass on benefits were found to be ‘‘illogical, arbitrary, and illegal, which has resulted in unfairness and inequality while passing on the benefit of tax reduction,” the National Anti-profiteering Authority (NAA) said this week. However, Nestle said that it will consider appropriate actions after studying the order and has been passing GST benefits by either grammage or price reduction.

Source: Financial Express