Published by VLMS GLOBAL Consulting INC
Posted on September 28, 2021
3 min readLast updated: February 1, 2026
Nestle India's chairman highlights inflation and uncertain demand as key challenges for 2022, with potential price hikes affecting consumer budgets.
Demand patterns are still mixed over the next few quarters, and Nestle India NSE -0.31 percent chairman Suresh Narayanan said it’s tough to declare that continuous consumption is here to stay. In an interview, Narayanan remarked, “We have to wait a few more quarters to see if the demand is sustainable and not the last few remnants of pent-up demand.” However, he noted, there is a “strong expectation” that this holiday quarter would be better than the previous one.
Consumer-facing businesses often have one of their highest yearly demand surges in October-December, which coincides with the peak holiday season. According to Nielsen data, even in the pandemic-hit prior year, there was some rebound in the festive quarter, with value sales growth of 7.3 percent.
Nestle India, the country’s largest pure-play packaged foods firm, has also identified inflation as a key worry. Nestle India’s products include Maggi noodles, Nescafe coffee, and Milo health drinks. According to Narayanan, 2022 will be a “difficult year” since commodities prices are expected to rise by 5% across global markets.
“Despite the fact that India has an unemployment rate of 8-10 percent, countless jobs have been lost, and many salary cutbacks have been made, there is unquestionable stress on overall family finances. In that environment, if commodities prices rise as well, it will put pressure on household budgets, according to Narayanan.
Nestle has hiked the price of certain of its products by 1-3 percent in recent months. In fact, most FMCG companies have raised prices in reaction to sharp rises in commodity prices.
With global commodity costs of coffee, milk, oils, and packaging up in the high single digits, Narayanan said inflation is “staring at all companies” and that the pressures are expected to be more acute. He stated, “There will undoubtedly be an impact on us.” Nestle is mostly reliant on local markets for sourcing, but it is putting in place provisions to ensure the best prices are available and to take use of economies of scale to reduce the impact of inflation.
“The economy is still on the rebound after all the worst situations; We are still trying to make a comeback strong, and the unorganised sector and Micro, Small and Medium Enterprise are still finding their bearings. As a result, logically, important products should be prioritised in the shopper’s consideration set over discretionary consumption,” he explained.
“We have the requisite size and competency for balanced nutrition and immunity products; and more of such items are being worked on,” he remarked in response to an international news article claiming that over half of Nestle’s products were unhealthy, citing an internal corporate document.
The main topic is the impact of inflation and uncertain demand on Nestle India in 2022.
Nestle India is raising product prices and leveraging economies of scale to mitigate inflation impacts.
Challenges include rising commodity prices and uncertain demand patterns affecting consumer spending.
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