Nestle India Limited has decided to re-enter the tea business by launching its own brand of flavoured and ice tea within the next few months.

As part of its diversification drive, the Vevey-based company is also considering the launch of its low-end bottled water brand.

Speaking to Business Standard, Carlo M Donati, managing director Nestle India, said the domestic and export market for flavoured and ice tea was very lucrative.

He added that the company would soon be setting up facilities for the same at its Choladi plant near Mysore, which was initially set up to manufacture instant tea.

Commenting on the brand positioning of the company's mineral drinking water, Donati said, the product would be positioned as a "safe packaged drinking water."

He also stressed that the brand would have Nestle's built in values of quality, which would also be projected in the product's marketing campaign.

Refusing to divulge more details about pricing and advertising, Donati said the water business in India had become a high pitch business with Bisleri, Pepsi's Aquafina and Coke's Kinley already in the fray.

Nestle also plans to expand its Maggi line of noodles and is all set to launch three new flavours in the portfolio.

"India does not have a market for ketchups and more than marketing initiatives, trade discounts have to be relied upon for pushing the product," Donati explained.

Also the entry of more players like Heinz would further compress the market, he added.

To offset the challenge the company is working out advertising and marketing strategies to expand the market as it did with instant noodle, Donati revealed.

On whether the company would enter the ice cream business, Donati said, "We will be looking at bringing in our brands of ice cream in India . However all would depend on the tariff policy of the government.

Indications are that tariffs would be high and that would not be good for the consumers."

Donati said the company would consider bringing brands existing in its global portfolio into the confectionary business in the post quantitative restrictions phase.

Donati pointed out that his corporate mantra for Nestle India Limited was based on three factors: operational efficiency, low cost production and reducing price points to funnel growth. "The Indian customer is price sensitive and wants value for money" Donati added.

Nestle's confectionary business followed Donati's mantra and subsequently the prices of Kitkat (two fingers) were lowered during the third quarter from Rs 7.50 to Rs 6. Similarly, the price of Nestle's Kitkat (four fingers) was also reduced from Rs 15 to Rs 12.

Admitting to the company's personnel loss, Donati said the dotcom boom was a major factor behind a massive exodus of people from the firm's sales and marketing departments.

He, however, pointed out that due to the recent downslide in the dotcom industry the trend has been reversed.

Donati also conceded that the flow of investments into India was considerably slower than those of China. This, he explained, was due to bureaucratic controls.

Over the past 10 years Nestle has invested almost $400 million in China as compared to $120 million in India in the corresponding period, inspite of a 40-year presence in the Indian market, Donati revealed.

(01/12/2000)

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