New Delhi: Nestlé India, the local arm of Swiss food and beverage company Nestlé, is working on two or three dozen new products in existing and new categories, even as the maker of Maggi noodles continues to consolidate its portfolio in India, a top executive of the company said on Monday.
These launches will be rolled out over the next few years, in line with the Gurgaon-headquartered company’s move to diversify its portfolio beyond its core Maggi and Nescafe brands.
“Going forward we will be aggressive (on new launches)," Suresh Narayanan, chairman and managing director, Nestlé India, said at the company’s research and development centre in Manesar, Haryana, on 18 February. “At least two to three dozen projects are on the anvil," he said, without giving a timeline for these launches.
The company recently launched a bitter gourd-flavoured yogurt after its entry into the breakfast cereals market last year.
Nestlé has been on an innovation spree after facing a crisis that saw its popular brand of Maggi noodles being banned across India. The company has since pushed for diversification of its portfolio. As a result, its product launches have seen a spike.
Between 2016 and 2018, Nestle India saw 39 new brand launches in the aftermath of the Maggi ban. Of these, 11 products were subsequently discontinued, according to an August 2018 investor presentation by the company.
Analysts remain largely positive about new products being rolled out by the company. “Nestlé has typically been conservative when it comes to innovation in India as it has traditionally focused on the bottom line. However, that has been changing over the last few years as it is investing in new products," said an analyst on condition of anonymity. “Some blockbuster products will be good for the company," he added.
Nestlé, which has rolled out new products such as premium chocolates, dips and spreads, breakfast cereals, nutrition bars, and ready-to-drink milk beverages in the last two years, has also recalibrated its distribution to reach more consumers.
Nestlé is cautious and could also discontinue products that are facing weak consumer demand, even as it pushes new products. “For 2019, we can also look at a bit of consolidation," Narayanan said.
Higher advertising and marketing spending also dragged down margins at the company, which stepped up efforts to back its new and existing brands. In the fourth quarter of 2018, Ebitda margins dipped by 361 basis points on higher brand spending. A basis point is one-hundredth of a percentage point. For the full year of 2018 marketing and advertising spending for the company was 6-7%.
Narayanan said brand support would continue as Nestlé sought to ramp up the contribution of new products in its overall portfolio.
On 18 February, Narayanan also announced the launch of a new India-specific website AskNestle.com. This will be rolled out as a platform to get “scientifically validated information on nutrition and recipes", he said.
For now, the website will work as “an information dissemination platform and going forward it could morph into something bigger that we could link up with our own e-commerce intentions," he added.