Nestle India is on a path to accelerated growth in rural areas amid a big question over the performance of these markets in India, company Chairman and Managing Director Suresh Narayanan. The company is increasing its reach in what it terms “Rurban” – a combination of rural and semi-urban areas.

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“When there is a big question on rural India and rural growth, I do admit that rural play of Nestle is only 20 per cent but you see the growth has been around 25 per cent to 26 per cent. Again rural India for Nestle India is resonating and we are on a path to accelerated growth in rural markets as well,” he told analysts in an earnings call.

Narayanan said distribution will be key in achieving growth from the smaller markets.

“The power and resonance of a consumer goods brand lie in the distribution …this is the area where we have a single-minded focus. In 2022, we accelerated our Nestle direct reach from 1.4 million to 1.5 million, overall reach at 5.1 million,” he said.

In 2015 as a consequence of the Maggi crisis, Nestle’s reach had shrunk quite considerably, Narayanan said adding, “we have built back on these years and now it is fully complete”.

On the challenges in rural and semi-urban markets, he said, “In towns of less than 1 lakh population, the growth was still positive but has come down from 13 per cent to 5 per cent. This is where the pricing impact of some of our small packs, especially rural categories has some impact.”

However, growth continues to be in double digits in mega cities although there has been a decline, he added.

“We have seen a dip there from 23 per cent to 12 per cent. I think this is the consequence of small pack sales,” he said, adding, “on the longer term basis, I do not see a cause of concern.”

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Metro continues to be strong. In terms of town class 1, with below 10 lakh population, the growth has been strong on the back of a strategy of increasing penetration focused on activities and activations.

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