Blog: Hannah AbdullaWe made errors in India, admits Nestle

Hannah Abdulla | 14 January 2014

Nestle India admits it made mistakes in targeting the low-income sector and as a result ignored the premium market.

Nestle India admits it made mistakes in targeting the low-income sector and as a result ignored the premium market.

With sales in India slowing, Nestle has made the unusual step of admitting it has made mistakes in its method of expansion in the country.

The head of the global food giant's head of Asia, Nandu Nandkishore, has reportedly said the company focused too much on targeting the mass market in India and, as a result, ignored more affluent customers.

Speaking to the Financial Times, Nandkishore said the company placed too much emphasis on "making its mass-oriented products available to large numbers of new, cost-sensitive consumers deep in the countryside", ignoring the demand for premium products from its higher-end consumer.

India has been one of the markets in which it has developed PPP or "popularly positioned products", affordable products for consumers on lower incomes.

However, Nestle has had to redress its strategy as economic growth in India slows and inflation remains high. The company's sales in India were up 8% in the third quarter of 2013, strong by Western standards, but far slower than in previous years.

Nestle still wants to cater to the mass market but is paying affluent Indians, which are more protected from the country's slowing economy, more attention.

It has recently switched tactics, introducing Alpino into India to compete against the likes of Ferrero and Cadbury.

Nandkishore's comments come amid some concern about the near-term challenges of operating in India, for all the longer-term potential in the country.

Click here for just-food's in-depth briefing on India's consumer goods sector, published in October.

Sectors: Confectionery, Emerging markets

Companies: Nestle

BLOG

Hillshire CEO Connolly bids farewell as Tyson sale sealed

Tyson Foods has completed its US$8.55bn acquisition of Hillshire Brands, with shares in the Jimmy Dean sausage maker delisted before the market opened today (29 August) - and its CEO leaving the busin...

BLOG

Progress at Synlait but challenges remain

New Zealand dairy group Synlait Milk revealed today (28 August) it has hit the "major milestone" of receiving regulatory clearance to begin exporting finished product from its new NZ$28.5m dry blendin...

BLOG

Shareholder pressure prompts ConAgra palm oil commitment

ConAgra Foods has responded to investor criticism of its palm oil usage by committing to source 100% sustainable palm oil by December 2015....

BLOG

Brussels ready to move again to help Russia-hit EU producers

Fresh produce growers in the EU have secured assistance from the European Commission in the wake of the Russian embargo and Brussels has indicated it would be prepared to step in again....

just-food homepage



Forgot your password?