Nestle India has increased its premiumization efforts with the acquisition of Purina PetCare India’s pet food business and the launch of its global premium toddler nutrition brand Gerber. According to Nestle, both categories have a sizable market with significant growth potential. The pet food market, for example, is worth approximately Rs 4,000 crore and is growing at a rate of 25%, making it one of the fastest-growing categories. The toddler nutrition market is worth Rs 3,500 crore and is expanding.
‘Premiumisation is one of our growth engines, and the pet food business and premium toddler nutrition are stepping in that direction,’ Suresh Narayanan, chairman and managing director of Nestle India, told analysts during an earnings call. For example, if the indexed price of Maggi noodles is Rs 100 per kilogram, the average pet food is around ‘140, and Gerber is Rs 700. ‘That is the kind of premiumization that we are talking about with these brands, which is significant,’ Narayanan said.
While Purina was introduced in India in 2018, Nestle India stayed away from it because Nestle built the business through a pet specialty distribution network, and with none of Nestle India’s products being sold through that channel, the Indian arm stayed away from it and let the parent invest in the business to get it started. Over the last four years, Purina’s business has been driven by a specialized channel distribution network in 46 towns with 50 distributors and 185 suppliers.
However, Narayanan stated that the market has evolved since then. ‘ With pet adoption on the rise following the pandemic, there are an estimated 30 million pets in India and growing at an 11 percent annual rate across all town classes, which means three million pets are added each year’. With dogs being the most popular pet in India, dry dog food accounts for 75% of the market, making it the most important segment. ‘Interestingly, wet cat food is also a strong opportunity that is growing at a rate of 35%,’ he said.
The sales growth has accelerated, with a 68 percent increase to 31.2 crore in 2021 and a 51 percent increase to Rs 46.3 crore in the first six months of 2022. In 2018, the company made Rs 11.5 crore in sales. The channel has evolved from a focus on specialized channels to omnichannel, with e-commerce now accounting for approximately 14 percent of sales.