Efforts Are On To Reduce Added Sugar Content Further: Nestle | Exclusive | CNBC TV18

Summary

In this CNBC TV8 interview, Sur Naran, MD of Nestlé India, addresses recent controversies regarding added sugar in infant nutrition products, emphasizing transparency and compliance with global and local standards. He discusses the company's commitment to reducing added sugar and its strategy for growth, including new ventures in pet care, Nespresso, and health sciences. Naran also touches on the company's financial performance, future demand expectations, and the potential impact of inflation on margins, while hinting at his possible tenure extension beyond July 2025.

Takeaways

• 📈 Nestle has reported strong quarterly results, outperforming the industry with a 9% revenue growth despite a slowing demand.
• 🍼 The company is currently in the spotlight due to concerns about added sugar in its infant nutrition products, particularly in the CAC brand.
• 🌍 There is a divergence in sugar content across different countries' products, with some European countries having zero added sugar compared to varying amounts in other geographies.
• 🔍 Nestle maintains that there is no formal communication with the Food Safety and Standards Authority of India (FSSAI) regarding testing of infant nutrition products, but has a professional relationship with them.
• 🚫 The company clarifies that there is no added sugar in food formula and that total sugars are tested, but there is no specific test for added sugars.
• 📊 Nestle explains that the nutritional profile of its products is globally determined, with specific requirements for protein, fat, vitamins, minerals, and carbohydrates.
• 📉 Nestle has reduced added sugar in its products by 30% over the last five years and aims to further decrease it, with a goal of reaching zero added sugar for the Indian market.
• 💰 CAC contributes to less than 20% of Nestle's overall revenue, as part of the milk and nutrition business which constitutes 40% of the total.
• 🛑 The company faces challenges such as inflation in raw materials like coffee and cocoa, which may impact margins and growth in the near term.
• 🔑 Sur Naran, MD of Nestle India, emphasizes the importance of transparency and trust, stating that Nestle has nothing to hide regarding the recent sugar controversy.
• 🤝 Nestle is expanding into new categories like pet care, Nespresso, and health sciences through joint ventures and partnerships, which will require investment and potentially impact margins.

Q & A

What is the main topic of discussion in the interview with Mr. Sur Naran, MD of Nestle India?

The main topic of discussion is Nestle's recent news, including its quarterly and annual results, outlook on growth and inflation, and the controversy over added sugar in its infant nutrition products.

What is the current relationship between Nestle and the Food Safety and Standards Authority of India (FSSAI)?

Nestle enjoys a professional and cordial relationship with FSSAI. There has been no formal communication regarding the testing of Nestle's infant nutrition products, but FSSAI has indicated that they would like to pick samples of some products for analysis.

How does Nestle respond to the allegations about added sugar in its infant nutrition products?

Nestle clarifies that there is no added sugar in its infant formula and that the brand in question, CAC, is subject to the same regulations as other manufacturers. They also state that there is no test for added sugar, only for total sugars.

What is the divergence in sugar content across different countries mentioned in the interview?

The divergence refers to the varying amounts of sugar in Nestle's products in different countries. For instance, the UK and Germany have zero added sugars, while some countries have more, and India is somewhere in the middle.

How does Nestle justify the presence of added sugar in its products in some countries?

Nestle explains that the presence of added sugar is determined by the nutritional profile of the product, which is globally determined, and by local regulatory conditions and habits. The goal is to meet the nutritional needs of infants, including the required levels of carbohydrates, proteins, and fats.

What is Nestle's stance on reducing added sugar in its products?

Nestle has already reduced added sugar by 30% over the last five years and is working on further reducing it. They are transparent about their efforts and are open to showing their processes to FSSAI.

What is the impact of Nestle's infant nutrition business on its overall revenue?

CAC, which is part of Nestle's milk and nutrition business, accounts for less than 20% of Nestle India's overall revenue.

What are Nestle India's growth expectations for the next couple of years?

Nestle India expects to maintain a growth rate of 10 to 11% and operating margins between 20 and 22%. They are focused on building back volume growth and managing the impact of food inflation.

How does Nestle India plan to manage the challenges posed by higher coffee and cocoa prices on its margins?

Nestle India acknowledges the volatility in the environment and suggests that their operating margins will generally be between 20 and 22%. They are focusing on sustaining penetration and generating relevant volumes to continue growth.

What is the potential revenue and growth rate for Nestle's joint venture with Dr. Reddy's in the neutraceutical space?

The joint venture is expected to reach a revenue of 1,500 crores in the next couple of years. It is expected to be margin accretive, though the exact growth rate and margin band are still to be determined as the business evolves.

What are Nestle's plans for Nespresso in India, and how will they ensure quality and competitive pricing?

Nestle plans to introduce Nespresso in India with a focus on quality, importing capsules and machines from Switzerland. They aim to set competitive prices, considering the presence of capsules from various sources in the market.

What is Mr. Sur Naran's future plan with Nestle India, and is he considering extending his stay beyond July 2025?

Mr. Sur Naran is currently fully committed to his role as the chairman and managing director of Nestle India. He is focused on the company's growth and addressing challenges as they arise, and has not yet made a decision about his plans beyond July 2025.