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Coronavirus crisis: Opportunities aplenty for consumer goods companies, says Nestle MD Suresh Narayanan

Nestle was an outlier in the March quarter, as it was one of the few consumer packaged goods (CPG) companies whose total sales increased by 10.8 per cent

twitter-logoAjita Shashidhar | June 4, 2020 | Updated 15:40 IST
Coronavirus crisis: Opportunities aplenty for consumer goods companies, says Nestle MD Suresh Narayanan
Nestle MD, Suresh Narayanan says that COVID-19 has also put in the minds of consumers an enormous concern for nutrition

The Coronavirus pandemic has led to certain stated changes in consumer behaviour, which going forward, says Nestle MD, Suresh Narayanan, could create a host of new opportunities for consumer goods companies like his.

While the obvious change has been that of consumers experiencing food brands within the four walls of their homes (the lockdown has forced people to stay indoors and eating out has come to a complete halt), Narayanan says that COVID-19 has also put in the minds of consumers an enormous concern for nutrition.

The kind of nutrition a brand seeks to offer and the trustworthiness of the brand, have become key parameters of a consumer's choice of a brand. "There are two kinds of behaviours that are already being demonstrated, one is trading down. People are looking at smaller packs and they are looking at popularly positioned products. Affordability is becoming important as people want to conserve the last Rs 10 as hedge against the future. However, there is still an affordable indulgence."

Also Read: How Nestle's change in operating model proved to be a game-changer

Nestle was an outlier in the March quarter, as it was one of the few Consumer Packaged Goods (CPG) companies whose total sales increased by 10.8 per cent. Even stalwarts such as HUL reported a 9 per cent decline in sales.

While most Nestle brands, be it Maggi, Nescafe, Milkmaid, or their UHT milk, already have a strong play in home consumption, the company, ever since the lockdown, has focused on accentuating it.

At a time when most brands are shying away from advertising on television or other traditional media platforms, Nestle, says Narayanan, has found a lot of merit in engaging with its consumers through its website, Maggi.in, where it has been sharing recipes that would come in handy to consumers for day-to-day cooking.

By offering basic recipes such as matar-paneer or moong dal khichdi, Maggi.in, claims Narayanan, has had phenomenal traction during times of lockdown. Similarly, the company's nutrition portal, Asknestle.in, wherein it has started putting out convenient nutritional recipes has attracted 1.2 million engagements in the last couple of weeks.

"It took us more than 7-8 months to get this kind of engagement last year. With kids staying at home through the day, there is enormous pressure on the mother in terms of creating new experiences for kids."

Also Read: COVID-19 Lockdown: Nestle, HUL, Dabur fear short manpower may stall factories

R.S. Sodhi, MD, Amul, in an earlier interview with Business Today, had also pointed out that the dip in out of home consumption of dairy products such as cheese, paneer or condensed milk has got compensated with an exponential increase in at-home consumption.

Consumption of cheese at home has seen an 80 per cent growth during the lockdown, while paneer saw 40 per cent growth, according to Sodhi.  

Narayanan of Nestle says that the degree of digital engagement is the other fall-out of the COVID-19 crisis. "Digital has become exceptionally strong and companies which have a strong digital-first capability, in terms of engagement, creation, and sustainability are the ones that are going to hold consumer interest for a long time," affirms Narayanan.

He says that unlike earlier times when digital engagement used to be there for a certain period of time, but for a few brands today, digital platforms of engagement and activation are being used across Nestle's portfolio of brands.

"Be it Maggi, Nescafe, KitKat, Nangrow, or Ceregrow, all our brands are enjoying the benefit of digital-first strategy. This is the play we will be using for a long time because consumers will be digitally far more active than what they were before," highlights Narayanan.

Digital engagement, according to him, will be three-pronged, "One is of recipe and information dissemination, the second would be on good nutrition, as that's a hunger spot as far as consumers are concerned and third, a lot of the earlier in-store activations would now become digital activations. This is the way the company will enhance its digital footprint."

He refers to a recent campaign that they had done for their chocolate brand, Munch, #Crunch Ka Attitude, which celebrates the confidence and spirit of young Indians, who are helping out their families to tide through the lockdown by teaching them to use technology.

The digital-first strategy would, however, not mean toning down traditional media spends, Narayanan emphasises, "Digital consumption or digital resourcing will get stronger, but TV will still be important. Even the press has a resonant role to play."

Also Read: Coronavirus: Nestle reports biggest sales growth in 5 years due to stockpiling

Narayanan also expects an increased relevance of e-commerce. He says Nestle's e-commerce contribution has doubled during the lockdown from 1.5 per cent to 3 per cent of its overall sales. "The neighbourhood grocer is also going to be a great winner because of accessibility, home delivery, because of credits, assortment and proximity. Organised trade will have to figure out how they want to and which platform they want to operate on, whether it is assortment, convenience, or location," he articulates.

Nestle has been able to manufacture at 70 per cent of its capacity and all its eight manufacturing facilities are operational. "As of now, the government for all the right reasons has allowed factories to manufacture at a labour strength of 40-50 per cent. We have requested to enhance it to 75 per cent in green and orange areas. Unless we do that, we won't be able to produce at full capacity and supplies will tend," enunciates Narayanan.

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