Nestlé India looks to crack packaged breakfast market, eyes acquisitions to expand portfolio

Nestle India Ltd is looking to position itself as a complete maker of packaged breakfast products and capitalize on this growing market by drawing in millions of Indians who still prefer freshly-cooked homemade breakfast.

“Nestle now becomes a breakfast company. We now have products that can be part of one’s breakfast,” Suresh Narayanan, Nestle India’s chairman, and managing director said on Monday.

Narayanan was referring to the launch last month of breakfast cereal brand, News plus, adding to Nestle’s portfolio of coffee, yogurt, curd, oats, noodles, and milk.

Nesplus has placed the Swiss packaged foods maker in competition with US-based Kellogg’s which has a 30% share of India’s breakfast cereal market. The local unit of US food and beverage maker PepsiCo has also been trying to crack the market with packaged local food items such as idli, dosa, upma and khichdi in ready-to-cook form.

India’s breakfast cereal market is forecast to expand to Rs 2,610 crore by 2020 from Rs 1,440 crore in 2015, according to market research firm Euromonitor International. Nestle India, in comparison, posted a revenue of Rs 10,135 crore in 2017.

Narayanan is hopeful Nestle will slowly crack India’s breakfast market to sync with its strategy of volume-led growth adopted after the local unit faced a crisis in June 2015 when the country’s food regulator banned its single-largest revenue earner, Maggi instant noodles, for alleged presence of monosodium glutamate and excess lead. It forced Nestle to remove Maggi from retail shelves for about six months.

“We are yet to reach the pre-crisis level. In terms of volume, we are about 10% below that level. In terms of market share, we have crossed 60%. We’ll still need some time to catch the pre-crisis level,” he said. Maggi currently comprises about 30% of Nestle India’s annual sales.

Nestle India, which crossed the Rs 1-trillion mark in market capitalization last month to emerge as the third-largest packaged goods company after Hindustan Unilever Ltd and ITC Ltd, said it is ready to “evaluate” potential opportunities for acquisitions.

“So far, we have grown through the organic route and there are strong organic growth opportunities still left. But, if there is an interesting and manageable opportunity that fits into the company’s long-term growth strategy, we’ll certainly evaluate,” Narayanan said.

He, however, didn’t say whether Nestle is evaluating GSK Consumer Healthcare’s malt-based health drink brand, Horlicks, or Kraft Heinz’s Complan, which are currently on the block.

Nestle is present in the malt-based drinks category with ready-to-drink Milo.

Source:-https://www.livemint.com/Companies/FTMNe436uYUGeuD6BySlUJ/Nestle-India-eyeing-bigger-share-of-breakfast-cereals-market.html

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