Nestlé’s Expansion into Rural India

Case Code: MKTG442 Case Length: 10 Pages Period: 2021 Pub Date: 2022 Teaching Note: Available

Price: Rs.300 Organization : Nestlé India Limited Industry :Food & Beverage Countries : India Themes: Marketing Strategy, Rural Markets, Distribution

Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

In 2021, FMCG Company Nestlé India Limited declared that it would spread its reach to 120,000 villages by 2024 by sprucing up its rural distribution channels. Suresh Narayanan, Chairman & Managing Director, Nestlé India Limited, said, “Rural is an important dimension of the next phase of Nestlé”.

Nestlé had always been associated with the urban market. Its product portfolio found takers mostly among urban Indians. It had, however, always had a presence in rural India though on a very small scale. In 2015, after the Maggi fiasco, where the product was banned in several states due to its lead content and was later reintroduced, Nestlé wanted to reduce its dependence on a few products and also widen its reach. By 2016, its reach extended to just 1000 villages. Nestlé planned to reach out to those villages which had a population of more than 5000. By doing so, it planned to cater to the needs of consumers in rural India, whose consumption patterns were changing rapidly, and where products tagged as ‘urban products’ were finding many takers. Nestlé also introduced several new products and was looking at extending its reach further.

As Nestlé was developing its distribution systems to reach the rural hinterlands, the competition was not far behind. Another FMCG major, HUL, was well entrenched in the rural markets with a presence in over 300,000 villages in the country. Indian companies like Dabur and ITC were also strong with a presence in more than 100,000 villages.

Issues

The case is structured to achieve the following teaching objectives:

• Understand how to design marketing strategy for rural market.
• Understand the sales and distribution in the rural market.

Contents

Introduction
Nestlé India Limited
Time for Change
The New Channels
The Results
The Competitive Landscape
Challenges for Nestlé
Exhibits

Keywords

Nestlé; Rural Expansion; Sales and Distribution; FMCG

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