Nestle India Chairman and Managing Director Suresh Narayanan on Thursday said that food inflation remains a cause for concern and the company is closely monitoring commodity prices. This comes amidst reports of deficit in monsoon in August and uncertainty around the impact of El Nino. He added that the industry expects to see a good festival season.

The packaged food major also announced its foray in the ready-to-make millets product segment with the launch of Nestle a+ Masala Millet, which contains bajra. The product has been developed under the guidance of Indian Institute of Millet Research. The company said it has a long-term roadmap to launch more millet-based products in different formats and incorporate millets in relevant products, including Maggi noodles.

Responding to a query on commodity outlook, Narayanan said, ”With reports of a deficit in monsoon and with the El Nino effect not fully played out, we still have to watch out for the spectre of food inflation. Headline inflation will be mitigated with the steps that the government is taking but food inflation remains a concern. While immediately there is nothing alarming, we will need to see how the commodity prices evolve especially in 2024. A lot will depend on the kharif and rabi crops.”

Bullish on festival season

“While we are cautious about food inflation, one can look forward to a good festival season. We have been witnessing strong demand trends across tier-2-6 towns and cities. Premiumisation trends also continue to be strong,” he added.

Pointing to the sharp increase in cost of production for dairy farmers, he added that milk prices will see voltalitility with some relief during flush season and escalation during the lean season. “Rural region’s contribution is about 20 per cent to our sales. At the moment they are looking stable. But if things go dramatically southward then there could be an impact on rural demand. So, one will need to see the impact of the shortfall of the monsoons and other factors,” Narayanan said.

Focus on millets

Meanwhile, Nestle India is focusing sharply on expanding its millets-based portfolio. Earlier, it had launched products such as Ceregrow grain selection with ragi, Milo Cocoa Malt with bajra and Koko Krunch millet-jowar breakfast cereals. It has now launched Nestlé a+ Masala Millet in two variants in Delhi-NCR with plans to expand its distribution in the coming months. 

“We felt that brand “a+” has a strong nutritional connotations and that is why we decided to launch the new product under this brand. This is in line with the government’s focus on millets and is a great example of public-private partnership. We have a longer-term roadmap to incorporate millets in relevant products and launch millets in newer formats in the future. There is growing health consciousness among Gen Z and millenials and we believe our new launch can become a mass market product,” he added. 

Credible nutritional proposition, customised offerings for Indian palate, greater connect between sourcing and processing and re-education of consumers on the benefits of millets can help make this a bigger category in the future, Narayanan added

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