NEW DELHI :
Packaged consumer goods company Nestle India said that while the maker of Maggi noodles and Nescafe coffee has ramped up its production capacity to about 70%, the company is hoping that the government will permit food processing companies to employ more workers so firms such as Nestle can tide over any supply shortages.
On behalf of FMCG companies, industry body Confederation of Indian Industries, has made representations to the government asking for worker deployment to be drummed up to 75% in green and orange zones.
“In terms of manufacturing capability we are about 70%, we have ramped up quite well, when we will reach 100% it is a bit difficult to say. It will all depend on labour deployment and permissions we get. Most places are giving permission of anywhere at 50% to 60% of labour deployment. So that’s where my suggestion would be—in the orange and green areas—we had requested this through CII as well—that the food processing industries be allowed to enhance workforce to 75% because otherwise we will have a situation where shortages will persist," Suresh Narayanan, chairman and managing director, Nestlé India Ltd, told reporters over a video conference on Tuesday.
To be sure, most fast moving consumer goods makers have seen their supply chains disrupt as India’s lockdown prompted them to temporarily halt manufacturing as they adjusted to country-wide restrictions.
This has also prompted the company to prioritize production of its stock keeping units that were in greater demand. “Brands will be available but in restricted number of SKUs" he said.
However, the company is yet to regain reach across all retail outlets—ie traditional trade and modern trade stores—some of which shuttered while others worked under restricted hours. Narayanan said the company has managed to cover 45% to 50% of its retail universe, so far.
"Fundamentally, things are getting very much under control, they aren’t perfect, not back to normal, but better than a few weeks ago," Narayanan added.
The pandemic has also spurred distinct consumer changes—with consumers now stocking up on health as well as hygiene products and veering towards online shopping.
Narayanan expects more consumers to buy in to the health, hygiene and nutrition categories and even spend on brands they trust. Consumers, he said, will focus on buying core "essential" categories going forward.
The company will also continue to deepen its partnership with e-commerce retailers as sales online jumped manifold in the last quarter.
“People are genuinely concerned about immunity, health, safety, and the whole life pattern has been redefined. The one thing clearly happening is that consumers are looking towards brands that offer them trustworthiness, safety, quality and good nutrition," he said.
However, the pandemic could also alter the company’s future innovation pipeline for the market.
“In the context of the emerging consumer trends, we have also recast our innovation pipeline. Some of the innovations that we might have had may not be relevant in the post-covid world and those are being jettisoned as we are looking at other innovations to occupy it," Narayanan said.
For the quarter ended 31 March, Nestle India posted a 10.7% growth in domestic sales driven by demand for its packaged food brands during the onset of India’s nation-wide lockdown.
Packaged goods companies are also closely monitoring consumer demand that is likely to cool off in the aftermath of a prolonged country-wide lockdown that has dampened economic activity.
“How robust is the underlying demand for your brands—that is an assessment most consumer goods players are doing depending on whether they are in essentials category or discretionary. I think that will change the equation for companies in the coming quarter," he said.
Moreover, for companies how manufacturing capabilities and capacities improve, and how the entire supply ecosystem is ramped up will determine the "robust and continuous supply of products," he added.