Nestle's chocolate hero

Jan 31, 2012
Nestle's chocolate hero

 

SOURCE: The Hindu Business Line

 

January 18, 2012: A couple of years ago Nestlé chairman Peter Brabeck likened the century-old foods giant to a flotilla of small agile speedboats backed by a supertanker.

The 'supertanker' refers to the Swiss company's value system and immense financial resources - both controlled very firmly from its headquarters in Vevey. The 'speedboats' are its operations in various countries.

One of those agile speedboats could well be piloted by Nandu Nandkishore, Nestlé's new Executive Vice-President and Zone Director for Asia, Oceania, Africa and Middle East (AOA).

Nandkishore, the first Indian to head a zone for Nestlé, rules over a gigantic fiefdom which caters to three quarters of the world's population. "But," as he points out, "only 27% of our revenues."

Ramping up revenues to match market size would be one of the key challenges before Nandkishore, a 23-year Nestlé veteran.

How he tackles that will be keenly watched, not just by Nestlé, but corporates worldwide, who are increasingly picking Indians for key roles in global MNCs.

Last year, at around the time that Rakesh Kapoor was being named as global CEO of Reckitt Benckiser, the Swiss company announced that Nandkishore, a Tamilian born in Kumbakonam, would replace Nestlé veteran Frits van Dijk as director of the key AOA zone, which Nestlé regards as the engine of future growth for the company.

And, although currently Nandkishore might be pulling the strings from the company headquarters in Vevey, he is no stranger to this zone, having clocked in a number of years in senior positions in Indonesia, the Philippines, and, of course, India.

In fact, his sweet run in Nestlé was triggered by his successful launch of the company's chocolate range in India. "From 1989-1996, whatever we did right and wrong with the chocolate business, you can blame on me," he grins. "And we did several of both," he admits disarmingly.

The marketer who has tread the familiar IIT-Delhi, IIM-Ahmedabad path (but unlike his peers, refrained from going to the US), cut his sales teeth in Ponds in Chennai, selling Dreamflower Talc in the hot summer months, before moving to Delhi. Here, he further honed sales as well as his Hindi skills with a five-year stint at Godrej.

His Nestlé journey began in 1989, where as brand manager he was initially responsible for the milks business, launching Everyday Ghee. But it was the chocolate launch that marked him out.

In India last week to roll out the global Nescafe Plan in the coffee estates of Coorg, Nandkishore, who is a history buff (in his spare time he reads up on Mongol history and can tell you what was said in the Roman Senate about India), spent some time with BrandLine. Excerpts:

On starting the chocolate business in India

In 1989 when I began working on chocolates, Cadbury's was the market leader. We did not have a licence to put up a chocolate factory. So we tied up a co-manufacturer, Campco. In one year's time, we had rolled out nationally.

Two years later, Polo was launched with another co-manufacturer, Bakeman. And then we were fortunate enough to be granted a licence to manufacture Kit Kat, and set up a factory in Goa.

When I left in 1996, our chocolates business was already 15% of the total Nestlé business in India, starting from zero. In 1993, Polo was ranked as the best brand launch and in 1995 the honour went to Kit Kat. This was the liberalisation period when foreign brands were coming in - we beat brands from Coca-Cola and P&G.

On working in different cultures

Fundamentally, I find people are very similar world over. You do have overlays of culture, but there are some interesting trends that are fairly global - the trend of what Thomas Friedman calls the Flat World; the trend of digitalisation; instant communication - Facebook, Twitter. Combine that with the bigger trend of demographic dividend in emerging markets such as India, Brazil and Mexico as opposed to ageing populations in markets such as Japan and Europe and it's a fascinating dynamic.

If you stay true to the fundamental human values of respecting people, you can work across markets.

On how a global company can be tuned to local needs

We believe that everything that the consumer sees, touches, feels, tastes has to be local. Almost everywhere, any country we have been in, Nestlé is seen as a local company but with a Swiss heritage. It's also been around for over a hundred years in most places. The length of stay makes a difference.

While business strategies are local, the core Nestlé management principles are common. It is made common by moving people around, so that the company's culture and values are very strong. One of the best kept secrets of Nestlé is the ability to develop leaders with cultural adaptability and the skill to evolve. We force ourselves to test our leaders in 3-4 different cultures, before we thrust them into an MD's position.

On the new leadership paradigm

Financial control is centralised, values are centralised, the functional custodian of quality is centralised, whereas business strategy is completely decentralised and empowered. It has moved from top down to be completely empowering, delegating without abdicating, of being a coach rather than a boss.

On the new health and wellness focus among food companies

Nestlé was the first to enunciate this strategy in 1998. If you look at the history of Nestlé, a lot of our business has been built on agriculture raw material processing.

There came a time when it was not sufficient to maintain growth and competitiveness. So there was a need to evolve our portfolio, to add R&D and science, put science to the agriculture base but more on nutrition and wellness. It's not a goal we will ever reach, but a journey.


On current challenges in India

The Nestlé business in India has been growing well. Yes, there are a lot of concerns on the projected slowdown in economic growth. But our view is that even 6% GDP growth is good. From a long-term perspective, India is a great market to be in.

In the longer term, it makes sense to invest in India. Nestlé has invested $500 million in new capacity. We will probably invest more.

But the challenge in the short-to-medium term is investing enough in building physical capacity without going overboard - just managing to stay ahead of demand. The second is human resources and capabilities to manage that kind of growth.

We have every reason to believe that India will be among the top five Nestlé markets worldwide. Today it's not even among the top 10.

On India versus China

First, it is not India 'versus' China. It is India 'and' China. We are an 'and' company. We are investing more in China. This year we announced two big acquisitions in China. China will soon be in the top five (Nestlé markets). Hopefully, in the next five years India will join China.