‘Worst Is Behind Us’: Nestle Sees Urban Recovery Lifting Growth

Nestle India Ltd.’s Chairman and Managing Director Suresh Narayanan said urban consumption is recovering and the worst of the slowdown may be over. He cited recent data that showed urban demand outpaced rural in terms of percentage growth.

“I think the worst is probably behind us,” Narayanan said in an interview with NDTV Profit. “The inflation is now under check, food inflation is especially under check. The overall outlook on the economy in terms of growth is positive. The monsoons look pretty benign. Infrastructure spending is unrelenting and is also fuelling consumption.”

Narayanan said all these factors are pointing in the right direction and align with observations made by other consumer goods executives. He added that the improvement is coming from both rural and urban areas, but urban demand is critical for Nestle, as it accounts for about 80% of the company’s sales.

Nestle India had earlier flagged signs of distress in urban consumption. Narayanan said growth in the broader consumer goods space had dropped from 13–14% to 2–3% over recent quarters. The company had identified this slowdown early, and he said it was later confirmed by official data.

He noted that while consumption stress persists, regional and homegrown competitors have also gained share by offering new choices to consumers. At the same time, changing consumption patterns—such as increased spending on travel and experiences—are affecting demand for packaged goods.

“Consumers are now less faithful to only a few brands. They like to experiment,” Narayanan said.

To respond to these shifts, Nestle has focused on innovation and brand relevance. The company has launched around 150 new products over the last decade, contributing 7–8% of sales. These launches have included new consumption spaces such as breakfast cereals, pet care, health science, and premium offerings.

Narayanan said the pace of innovation is now three to four times faster than in the past. He said the company is working on both expanding existing categories and entering new ones.

“All the vectors are pointing in the right direction,” he said. “Things seem to be turning for the better, which is a good.”