Nestlé India, HUL in focus: FMCG sector faces three key challenges; what leaders say

What the Nestle India chairman said

FMCG major Nestlé is concerned over 'volatility' in prices due to rising input costs amid geopolitical uncertainties, even though it chases volume-driven growth in the new fiscal, said its Chairman and Managing Director Manish Tiwary.

The maker of Maggi noodles, Nescafé and KitKat struck a cautious note, saying it will "wait and watch" as "nobody can predict the situation two months down the line" amid "geopolitical tensions, some concerns around the monsoon", and fluctuating commodity costs.

Nestle India remains focused on expanding consumption and penetration, with a strategy centred on driving volumes while offering better value to consumers and leveraging technology to improve operational efficiencies, he said.

"Times are volatile. It's a difficult thing for anyone to predict what's going to happen even two months down the line," Tiwary told PTI in an interaction.

Tiwary did not mention any immediate price hike but said volatility in the market due to current geopolitical tensions is creating cost pressure as there is a surge in raw materials and crude-linked packaging rates.

The bulk of Nestle's production is done in the country, and more than 97% of our own material is sourced locally, Tiwary said.

Nonetheless, this "would still not insulate us from further inflation" as it will depend on how the political situation changes in the Middle East.

"So, that is something which we have to be ready for. So, that's a little bit of a yellow flag in the future which we see," he said, adding the company will also internally try to optimise through cost efficiencies.

Recent developments in the FMCG space to know

Most FMCG companies have announced a fresh round of price hikes of around 3 to 5% in the March quarter, on account of a 15-20% surge in raw material costs, high crude oil prices that are impacting packaging, and a weakening rupee.

Last week, the CEO and MD of leading FMCG firm HUL, Priya Nair, said it will implement "calibrated price increases" to manage rising input costs due to a surge in raw materials and crude-linked packaging rates.

Other updates from Nestle India

Tiwary noted that despite volatility, Nestlé India has seen "the right momentum" led largely by volume growth across its businesses during FY26. The company also stepped up advertising investments significantly in the second half of the fiscal year to support its core brands.

When asked about Nestle India's outlook for FY27, he said, "We will continue to look at volume and let penetration grow."

According to Tiwary, Nestlé's strategy to invest behind core brands to drive volume-led growth, backed by a disciplined cost optimisation with leveraging technology, is paying dividends.

"Going forward, we continue to stick to our strategy to drive volume-led growth, fuelled by investment behind this brand, and we will continue to be very disciplined in our execution," he said.

Besides, Nestlé India is also open to acquisition if it finds the right fit.

"This is a very comprehensive portfolio to sort of take our business to the next four to five years. At the same time, there is a team which keeps on looking at new spaces, possibly to see acquisitions," he said.

Nestle India, which is expanding its presence in the rural market as per its 'Rurban' strategy, has taken distribution spokes from 25,000 to 45,000.

"I think my rural market, the rural business, will grow much faster than the overall sales," said Tiwary.

What HUL's parent have said

Unilever's Chief Executive Officer (CEO) Fernando Fernández has said that disruptions in the global supply chain and a surge in packaging costs due to rising crude oil prices have led to a shortage of local competition in markets like India, and it may support Unilever's volume growth in categories such as home care.

The British multinational consumer goods maker "sees opportunities coming from the constraints in supply in the global market" even as its multipolar supply chain remains resilient.

"We are seeing some shortage in some local players, particularly in India and Southeast Asia, that can support our volumes, and it will make easier the passing of pricing in the future," said Fernández in the earnings call.

In Q1/2026, the British consumer goods major achieved its highest-ever share in laundry powders in the Indian market and is also "sharply" increasing its position in the fast-growing liquid detergent segment.

The performance of its local unit Hindustan Unilever Ltd (HUL), which reported a 6% volume growth in the March quarter, has been of a 'very high order', said Chief Financial Officer Srinivas Phatak, who was also on the call.

While inflationary pressures persist, driven by imported crude and currency movements, categories such as home care could actually benefit.

"Classically, in home care, inflation works in our favour," he said, underscoring HUL's ability to balance price and volume through its diverse portfolio.

What is "volume-driven growth”?

“Volume-driven growth” means FMCG companies are focusing on selling more products to more consumers, rather than depending on price hikes—especially important when costs are volatile and demand is sensitive.

How FMCG shares have fared in short term

Data show that the NIFTY FMCG index has jumped over 11% in the past one month. Hindustan Unilever shares have jumped nearly 9%, while ITC shares have rallied nearly 8%. Nestle India shares have gained 20% in one month.