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Multinational Food Companies Target Indian Market
Ratna Bhushan
Economic Times
June 28, 2010
NEW DELHI: India is at the centre of attention of consumer products
multinationals such as Unilever, Nestle, Procter & Gamble, GlaxoSmithKline,
Kellogg’s and Yum! Foods, who have all recently named the country
a critical market at various investor meets as sales have stagnated
in traditional markets like the US and Europe.
They are accelerating investments, pushing distribution and fine-tuning
strategies, with their sights set on the country’s huge middle-class
population.
“With annual per capita income crossing the inflection point of $1,000
and India now the second-fastest growing economy, no consumer company
can afford to miss India’s consumption boom,” says Anand Mour, FMCG
analyst at broking firm Indiabulls Securities. Frits van Dijk, Nestle
SA’s head of Zone Asia, Africa and Oceania, last week told an investors’
conference that successful price point management in India is a key
pillar of growth for the world’s largest food company.
He also announced an investment of 1.5 billion Swiss francs ($1.35
billion) in India, Brazil, Russia and China between 2010 and 2012.
“Emerging markets such as these and popularly positioned products
are accretive to our growth and will enhance topline and bottom lines,”
Mr Dijk said in a presentation.
The Rs 5,129-crore Nestle India, which makes Maggi instant noodles
and KitKat chocolates, said it reached over 2.2 million Indian customers
last year. It plans to set up a new research and development centre
in India in 2012.
Yum! Brands Inc, which owns KFC, Pizza Hut and Taco Bell restaurant
chains, expects profits from India to reach $100 million by 2015,
riding on solid same-store sales growth and expansion.
The Kentucky-based company plans to invest an additional $100-120
million in Indian operations by then, senior vice-president Tim Jerzyk
said at an investor meet last week. Niren Chaudhary, India MD of Yum!
Restaurants, told ET: “Our goal is to become a 1,000 restaurant company
employing at least 50,000 people by 2015. We plan to grow five times
in the next five years.”
At a Deutsche Bank Global Consumer Conference on June 15, world’s
largest cereal maker Kellogg’s international business head Paul Norman
said India was set to become the capital of heart health and diabetes
over the next decade. A third of Kellogg’s turnover comes from outside
North America, and the company said it would use its brands to build
presence in India, France and Mexico.
The Cincinnati-based P&G is targeting one billion new customers by
2015, mostly from India and China. “The bigger picture here is that
there are almost seven billion people in the world today and we reach
only half of those. As we strive to serve the remainder of the world’s
consumers, India becomes an important destination,” said a spokeswoman
of the maker of Pantene shampoo, Tide detergent and Pampers diapers.
Paul Polman, global CEO of Unilever, said at an analyst presentation
post-2010 first quarter results that the consumer product major’s
“focus of disproportionate attention” was India. “There is still much
to do in India but we are confident we are doing the right things,”
he said.
GlaxoSmithKline Consumer Healthcare, which makes Horlicks and Boost
milk-based health drinks, will invest over Rs 270 crore in its Indian
arm over the next three years — the fastest growing market for its
international division (excluding the US and Europe).
Anand Mour of Indiabulls Securities says that opportunities exist
across the pyramid for these consumer firms, from unpenetrated markets
to premiumisation opportunities riding on rising aspirations.
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