Business & Investment

2022 will be a “difficult year” as commodity prices can rise: Chief of Nestle India

Nestle India chief Suresh Narayanan said on Monday that 2022 is likely to be a “difficult year” as commodity prices are expected to rise and raise concerns about food inflation for manufacturers.

Nestlé’s average price has risen 1-3% in the last six to eight months, according to Narayanan. According to him, in the first half of 2021, milk and wheat prices were generally stable, with the exception of packaging and crude oil, which made them relatively safe and restrained in terms of commodity prices. “The next 2022 is expected to be a clearly difficult year.

Milk prices are clearly on the rise, “Narayanan told reporters at a virtual media roundtable. Similarly, global coffee prices have risen “quite significantly” as the pandemic and turmoil have adversely affected Vietnam, the largest coffee-producing country, Narayanan said.

“Therefore, there will be concerns about food inflation staring at us,” he added, adding that the large economies of scale are so strongly open that it will put pressure on future raw material supplies. .. Globally, commodity prices have risen by about 5%, he added. “I think the positive pressure is likely to be more serious than what we are currently experiencing,” he said. Nestle India is primarily a local economy in terms of raw materials, but Narayanan said it has “definitely” impact, which is an area the company is focusing on.

“Of course, there is no immediate kind of reaction we have, except to ensure that we sharpen the pencil as far as the range of goods is concerned. A table of sustainable sourcing practices,” he said. Commodities are likely to be more expensive, so Nestle India hopes to mitigate some of its impact by using its scale as a large company in the industry. “The only silver lining I see in the context of India is that the rabbi crops are decent because the monsoon is pretty strong across the country … as far as the agricultural sector is concerned, we have some As far as this inflation is concerned, there may be mitigation measures. “

Regarding demand, Narayanan said there are three major trends in the market. Middle class and urban consumers are sticking to credible brands. budget. “There is an unleashed vibrancy that is happening. The last festive season was rooted in many other players. From now on, this Diwali festival is definitely much better than the previous Diwali festival. I have high expectations, “he said. .. Nestle India is also expanding its rural coverage to cover villages of Rs 12,000 with a population of 5,000. Currently, it covers about 90,000 villages and about 25% of total sales come from local markets.

Megametro and Metro are expected to have a fairly strong recovery in consumption. Even with perfect normality in the urban market, “the local market will not collapse in a hurry, there may be some growth,” he said. Nestle India witnessed strong growth in the e-commerce segment during the pandemic, which contributed nearly 6% of the company’s total revenue.

Narayanan said sales through other channels are expected to be stable, but e-commerce will continue to be relevant to many consumers who are still in the habit of buying online. Nestle India, which plans to invest about Rs 2,600 in India over the next three to four years, is also applying for a production-linked incentive system for the government’s food processing sector.

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2022 will be a “difficult year” as commodity prices can rise: Chief of Nestle India 2022 will be a “difficult year” as commodity prices can rise: Chief of Nestle India

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