Urban Cities In India Face Strain Amid Muted Demand, Rising Food Inflation: Nestle India CEO Narayanan

Urban cities in India are facing significant strain as muted demand and rising food inflation take a toll on the market, according to Nestle India CEO Suresh Narayanan. Mega cities are particularly affected, with weak performance in segments such as milk and nutrition, chocolate, and confectionery, he said, adding that brands like Munch are also contending with increasing regional competition.

Besides, Nestle India is planning further price hikes on coffee due to soaring input costs, including a 2.5-fold increase in cocoa prices and a 60-70% rise in coffee prices over the last year, Narayan told reporters during a select media briefing on Tuesday. The company had previously raised prices by 15-30% to manage ongoing cost pressures and had also vacated lower price points of Rs 5 to protect margins, which may affect consumer accessibility.

Rural areas, in contrast, are holding steady, with relatively stable demand, Narayan highlighted. However, Nestle's Milk & Nutrition, chocolate, and confectionery segments have shown weak performance, with brands like Munch facing regional competition, he said, adding that despite these challenges, sales from quick commerce have become the largest revenue contributor among channels.