A lot of legacy players will have to recalibrate their brands: Suresh Narayanan

Apart from that, there were challenges of launching new products, some of which did not do well, some of which, in fact, failed. That taught me adversity is a great teacher, and that, as a leader, if you have to… find the bullet and pick the shots. That was the other lesson I got from these experiences. So, really speaking, I was blessed somewhat to be in an organisation where leadership development was an important aspect of the growth of the organisation.

Q. Let’s fast forward to the Maggi crisis that was a key moment in your career and time at Nestlé India. How important was the fact that the regulators dealt with this in a manner that sorted the crisis out rather than just penalising the company?

We were able to face the crisis as a company, and me as a leader and my team in the Nestlé family, because our spine was absolutely straight. We were super confident about the quality and safety of our products. They are always safe… they have always been and always will be. That is the core ethos of my company. That is invaluable. You may not like the brands. You may not like the colour. You may not like the taste. I mean… that’s a personal choice.

But food quality and safety are something we will never ever compromise on. So the matter went to court, and I think that was fortuitous somewhat.

The two honourable judges in the Bombay High Court took it upon themselves to try this matter for three months continuously almost on a daily basis. Then they came to the conclusion that there had been a violation of the principles of natural justice, and that an organisation needs to be given an opportunity to test its products in accredited laboratories before they need to lose it or before the product gets banned, as the case may be.

Not one, I repeat, not one sample came out negative. So, in some sense, the court opened the door for us to be able to relaunch the brand, and we brought it back just the way it was. There was a lot of talk about whether Nestlé will change the brand, change the colour, change the taste, change everything.

We said Maggi is so close to the consumer. In fact, we ran campaigns during the crisis, which said: ‘We miss you too’.

Q. What was your reaction when your boss called you in the Philippines and told you to take over the India business during that crisis?

My mother had passed away, so I consulted my father and asked: ‘What should I do?’ He is an old-school, government servant. He said, ‘Look, call of duty…. you shouldn’t be asking any questions’. He added that one of the things you should know is that if there is a crisis, you don’t pick an idiot and send him to handle it. You send your most trusted person to be able to manage it. So, go back. I owe a lot to this team. I think ultimately, it’s a joy to be home, not only because of the sheer challenges of the home, but also because you’re surrounded by a set of sincere and passionate people.

Q. In your stint post 2015 at Nestlé, sales were up two and a half times, profit six times and market cap rose at a 15 CAGR. What are your views on the industry in its present state? From about 2008 till 2020, the FMCG industry in India did well and so did Nestlé along with its peers. But in that time, the consumer, distribution models and products they want have changed. How were the first five years of your tenure different from the last five?

The consumer certainly has moved in the last 10 years. A few things have happened… Covid has been the biggest interruption or the biggest disruptor.

There is almost a pre-Covid and post-Covid era of consumption. Consumers today are no longer just looking at price value equation… they’re looking at a brand from the point of view of its benefits—at least nutrition efficacy—its nourishment capabilities and various other parameters. So that has been the first change that has taken place.

Second, variety has become the spice of life. Innovation levels have gone up significantly and innovation is very much a part of not only the phone industry but also the consumer space.

The third thing is premiumisation has become a core strategy for many organisations because there is clearly a class which is capable of buying expensive products and higher value products. That’s an opportunity for companies that has opened up.

The fourth thing has been, of course, the opening up of rural, which is the Tier I to VI towns and villages. Aspirations have become convergent now, thanks to the media.

Also read: Nestle India: Inside the city slicker's rural gambit

The fifth one that has become important is that there has been a crop of regional brands that has come up. Regionalisation is taking place. Local brands are coming up. Some of them are doing quite well. They have fairly strong sustainable compositions. And that is definitely something that the larger players have to take as part of their equation, as they make their own business plans for the future. So, a lot of things have changed.

One of the things that has changed in the last two years has been inflation. It has been quite high. It has now moderated, but inflation is quite high and is having an impact on real income.

Q. There is now a debate on whether the traditional impenetrable moats of the FMCG business still hold because you had that shelf space, strong distribution networks… advertising could be national. Now a lot of those moats are not that strong.

Distribution certainly is still extremely important. I think what has happened now, of course, is because of the development of different channels, especially quick commerce, you are able to get on this channel and get quick traction depending on the efficacy. Nevertheless, mass distribution is still an important aspect and still takes some expertise. You know, it is being digitised. It is being made increasingly more sophisticated. But distribution remains important.

You may not call it a moat any longer, but it is definitely a competitive strength of companies that they have. Brands are important. Consumers buy brands, but brands need to be recalibrated. So, the millennial or the Gen Alpha… they have a different kind of view of brands. Brands are those which represent their generation, their taste, their aspirations and their heartbeat. And they don’t necessarily go by the history of the brand.

So a lot of legacy players will have to recalibrate the brand. We do… for example, with a brand like Maggi, we come up with new innovations constantly, with new taste, with new flavours. Why do we do that? It’s because the consumer is evolving, and the consumer doesn’t want the same taste.

Also read: Masala & Magic: Can Nestle make its magic work in Bharat?

Is it easier to build brands now? The challenge that some of the smaller brands face is not that of launching. I can reach Rs1 crore and Rs5 crore and Rs10 crore or whatever is the category salience. But if I have to become 200, that needs a different organisation.

So I think the challenge, and which is a positive challenge for the startup industry and for the regional brands, is to be able to scale up. If I am content selling in a district or in a town or in a set of geographies in a particular place, in a particular state, then it’s fine. But if I’m looking at becoming a national brand, then scaling up requires skill sets, both organisational, infrastructural, strategic and tactical, which are different from playing a smaller game, in a smaller niche, in a smaller channel, in a smaller geography.

Q You’ve said you’re looking forward to days of doing absolutely nothing after retirement. For a busy corporate executive is that really a choice? I’m sure at some point you will get back to teaching or whatever else you want to do.

I like to spend time thinking and working when I can. But now I can do it unhindered and without any compunction. Without any wishes. I can choose some days where I do nothing. Rather I plan to do that actively. At least it gives me a choice, a freedom to choose that as an option. A number of leaders have had a positive exposure, feedback, mentoring. And I look forward to coaching young executives.

I mean, in fact, a part of my desire to teach is with the goal of being able to help move the next generation of corporate leaders within the country. Where some amount of mentoring will happen offline, or it will happen in the course of teaching.