New Delhi: It is an action-packed week for Paul Bulcke in India. Not only is the chief executive officer of Nestle SA the co-chair at this year’s World Economic Forum to be held in Gurgaon, he has attended events (Creating Shared Value Forum) and business review meetings organized by the company. Later this week, Bulcke will be present at the opening of Nestle’s research and development centre. “It’s an interesting week,” said the CEO, speaking at length on the Indian consumer, the country’s potential and its infrastructure bottlenecks. Edited excerpts from the interview:
On the co-chair part of your journey, the theme is deliberation and transformation. What is it that this World Economic Forum will achieve because this is the first time that it is not in collaboration with the Confederation of Indian Industry (CII)?
Yes. If you look at the title, I think it says, “Enough of talk. Let’s do”. It’s a little bit of that. What it reflects to me is India that says we have so much opportunity, all these possibilities...we should go. I think the meaning of this is, saying to yourself as a country—“let’s go forward and say to the world we want to go forward”. So it is internal and external in my eyes. I feel it’s a positive thing if action comes after this.
You have a strong presence here but what do you see when you look inside from outside India? You said you are happy with the changes and hopeful. But on a scale of 1 to 10, how do you rate the change?
I would say differently. For what India could deliver, it is low. Very low. There is so much you could do. You have the education, the language, the connect with the world, the history and tradition of democracy and all that. Actually, you have all the cards in your hand, you have to play them. But that has to be linked with the common purpose and the discipline to execute. Everybody knows what has to be done. But it doesn’t always get done. Rationality and common sense should be there always.
How challenging has this year been for the world’s largest packaged goods company given the macroeconomic situation?
We have selective memory. So what happened five years ago, we say was easier than today. And yet when we think about four or five years ago, it was a very difficult year. 2008 and 2009 were very difficult years. If you see the macroeconomics—and we are part of the world—I don’t remember one year that started with the feeling that it’s going to be an easy one. Is this an easy one? No, it is isn’t either. We had years before volatility of materials and now we have some softening in what we call the growth engine. We are a company that is in an activity that is not directly in the same percentage linked to GDP (gross domestic product) growth. We are a sector and a sector has its own dynamics which is linked to the emerging consumer, with the building of middle class and with innovation. It is the beauty of our company to drive our own innovation agenda, to go for the growth that we have projected. We have projected a line of growth, globally speaking, of 5-6%.
Critics argue that innovation at Nestle has slowed down.
Is that specific to India or is that worldwide? Because worldwide, our growth in western Europe is partly, although importantly, driven by innovation. We pride ourselves quite a lot on meaningful innovation. You can also hyperventilate innovation. We always feel we should do more. If you start to be happy, you start to be in a dangerous territory.
What is your vision for India in the next five years. Where do you see Nestle?
If we have invested a lot this year, $500 million, it is the best expression of trust we have and the confidence we have in the potential of the country. Do we see that happening? Yes, otherwise we would not have invested. We are going to open the R&D centre which will drive innovation linked to local dimensions and local raw materials.
We are going to focus on insta noodles. This whole technology for the Nestle group is important. India is the lead market in expertise and business. We will also go for this fascinating concept called PPP, or Properly Positioned Products, which will have engineering and all the elements of marketing mix such as product distribution and communication around an offering for a part of society, that is, the new middle class or the emerging consumer. These consumers have traditional needs, specific purchasing patterns and you can link up with these people in another kind of language. We also do price points that are meaningful to these people because they buy daily. In India, our R&D will drive that (PPP). Not only in India but the whole region. If you add it all up, we should grow quite substantially here.
Does your focus in India remain on ready-to-cook food such as Maggi or are you looking at other product categories?
We have a vast portfolio of products and we do feel Maggi is a very important one here. But you have Nescafe, you have milk. We are extending milk intake in this country. We have been linked with milk district in Moga in Punjab, but we are also looking for milk in the south. We have beverages and a confectionary line. Milk products are very, very Indian like Munch—a chocolate coated biscuit that is actually extending to many countries.
There are many platforms that we build our presence on. Just look at the size of this country. We have eight factories now—two or three are multi-category factories. So eight factories for this continent that is called India. I think it is just a start. We have been a long time in India. I still say start because I feel there is much more in what the country can offer.
Consumption habits in India are not homogenous. Do you recognize that and tweak your offerings differently?
It is not (homogenous). You go to the south, it is very spicy. We have a different portfolio there. Actually, that is why we are very local. We are very decentralized. Having one Nescafe worldwide is not possible because in food that is the wrong scaling up. Food is local. We have many different taste profiles. Nescafe has 180 different blends in the world. In that localness, we have regionalness. But that is for Nestle India to manage. That is why we have managers here who are from here who understand this country.
So is Nescafe in the south different from Nescafe in the north?
In the north, 100% soluble coffee is popular. In the south we make a blend which is much stronger. It’s a blend, it is darker. Then you have sugar profiles. The advantage of India is as you go south, it is not just a small region with small consumers. It is huge. In Brazil, for example, we went to the north-east and began a factory there because there are 65 million people. In India, it is not 65 million. It is many many more. I feel eight factories is actually scratching the surface if you think about the potential.
Your ice-creams are very popular in Europe. Why don’t you bring them to India?
We have a little bit of a problem with logistics, freezing, cold chain. So we don’t want to go in a direction of products where we cannot really assure quality. These are all the considerations we have to take in account. We believe in ice-cream business but it has to make sense in quality and economics.