Enough Indians seem to be taking KitKat breaks and making two-minute meals since the FMCG firm's seeing the kind of growth it's never seen before. This will be the shortest Lunch with Business Standard, I have begun to despair. Martial Rolland, the chairman and managing director of Nestle India, announces soon on arrival that he is rather full and will stick to just salad. Three-sixty at The Oberoi always has a good multi-cuisine spread "" Continental, Chinese, Thai and Indian. But Rolland, it seems, has a long day ahead and wants to stay light, writes Bhupesh Bhandari.
After a round of salad, we do line up for the "real stuff" at the Indian food counter. Only, Rolland does not have an appetite for spicy Indian fare as he eats it in the office canteen every day. It is never easy to say no to succulent kebabs and thick curries, but clearly Rolland wants a break.
Nestle, the world's largest foods group, is as Indian as any multinational can get. It came to India way back in 1912 as the Nestle Anglo-Swiss Condensed Milk Company (Export) Ltd and sold imported products in the country. Rolland too is no stranger to India. This, in fact, is his second innings here "" he had earlier served in the same company for three years from 1989 to 1992.
"There is a big difference between then and now," says Rolland, munching his salad. "Earlier, our employees were happy to get married or get a foreign posting. They are much more ambitious now." Rolland is French but speaks perfect English without any trace of an accent. He lives in a farmhouse on the southern fringes of Delhi and travels to the interiors of India every month to get a first-hand feel of the market.
Though best known for its urban brands like Maggi, Milkmaid, Nescafe, KitKat and Polo, Nestle has a deep connect with India's rural hinterland. It has played a long role in developing Punjab's milk economy. A little-known fact is that Nestle set up its milk processing plant at Moga, Punjab, after Independence at the Indian government's behest. Today, Nestle collects milk from over 100,000 farmers in Punjab. "The company ran its operations without disruption even during the militancy days," says Rolland.
The Moga plant, I remind Rolland, was set up way back in 1961 "" no less than 46 years ago. After that, the company has not set up similar operations in any other state, though others have done so. "This is because," Rolland tells me, "developing the infrastructure for something like this is a time-consuming process." And when I ask him if Nestle will also get into packaged milk like so many others are doing it now, he replies in the negative: "There is no value addition for customers in it."
"Have you tried to leverage this association for some other business venture?" I ask Rolland, who has opted for fresh lime soda. (As he has turned down my offer for a beer, I am left with no option but to cool myself with fresh orange juice.) To my surprise, Rolland is quite forthcoming: "We did try to sell some of our products through our collection centres, but with limited success."
Among Indian FMCG companies, Nestle has the biggest basket of products. And, like any other FMCG company, Nestle has had its share of product flops "" pickle, mithai and, most notably, packaged water.
The company had launched Pure Life just before the pesticides controversy broke out four years back. In the ensuing confusion, Nestle quietly withdrew it from the shelves. However, the market shrugged off the controversy soon and other brands have grown at a fast clip since then. Was it a hasty decision? Rolland says the decision could be reviewed in the future. His predecessor, Carlo Donati, who launched and then withdrew Pure Life, is now heading Nestle's packaged business worldwide.
Apart from pesticides in packaged water, Nestle has lived through another controversy in the recent past. Some three years back, worms were found in some well-known chocolate brands (not Nestle's) and that hit chocolate sales all over the country. "Not ours. We didn't see any fall in sales," says Rolland. In his portfolio, Rolland has some big chocolate brands like Munch and KitKat.
While Rolland munches on the small helping of salad, I am curious to know if the chocolate business has life left in it on account of the growing heath consciousness all over the world. "Chocolates now fall under the category of junk food along with colas. How long can it be sustained?" I ask him. Over the next five minutes or so, Rolland staunchly defends chocolates, so long as they are consumed in moderation. "A chocolate a day does no harm if you burn the calories," he concludes, admitting that he himself is a regular consumer.
In spite of these hiccups, Nestle has done well under Rolland. Its EPS has grown by over 25 per cent since he took over in December 2004, in spite of current raw material (milk and coffee, for instance) prices being at a record high. He has also been able to ratchet up the company's quarterly sales growth to over 20 per cent from "low-teens" in the last two years.
For long, the FMCG sector has been feared to be in the grips of severe downtrading "" consumers are supposed to have started buying more lifestyle products by cutting down on FMCG expenses. "How did you manage a growth of over 20 per cent?" I ask him.
Rolland attributes it to two initiatives: corporate restructuring that created dedicated teams for each product category and some intelligent product development. Acting in concert with Nestle's product development centre in Singapore, the company recently came out with Maggi rice noodles. This, Rolland says, has opened the southern markets for the brand: "The maida (super-refined wheat flour) Maggi noodles were positioned as a replacement for four chapattis which are eaten largely in north India. With rice noodles, we have covered the whole country."
Some months back, the company launched its raita and Nesvita pro-biotic yogurt aimed at health-conscious consumers. Around the time the company launched its advertising campaign, Mother Dairy too launched its campaign for a similar product. The co-incidence was not missed by industry observers. "Difficult to keep a business secret in India?" I ask Rolland. "I don't know," he breaks into a laugh.
The restaurant has filled up by now and the noise levels have risen considerably. Well-provided for women have started descending in bunches. Rolland says he has another meeting to attend and declines to have dessert. I ask him his unfinished agenda. Beverages, he says, need to be put on track. Nestle's health supplement for children, Milo, is nowhere in the reckoning and Rolland feels there is an urgent need to fix this problem. Except, he doesn't tell me what he plans to do.
On our way out, a young lady greets Rolland "" the second woman to have done so in the hour or so we were together. I compliment him on his popularity among women. A black Audi takes him for his next assignment.
