Local multinational is focused on contributing towards people’s nutrition, health and wellness, and development of the rural economy
Nestlé Lanka’s vision is to contribute towards enhancing the quality of life of Sri Lankan people and the company will be doing this in two ways, said Nestlé Lanka Managing Director Shivani Hegde.
In an interview with the Daily FT, she asserted that the company would contribute towards the nutrition, health and wellness of the people while also contributing towards the development of the rural economy. “These are the key ways in which we believe we can enhance the lives of Sri Lankans,” she noted.
Her vision for Nestlé Lanka is focused on building the seeds for the next 100 years, she affirmed, stating that Nestlé is a very strong and deep-rooted local multinational in Sri Lanka which has been here for 100 years.
Following are excerpts:
By Marianne David
Q: You took over as Managing Director of Nestlé Lanka about two months ago. How has the experience been so far and could you outline your first impressions?
A: As far as impressions go, I would like to talk about my impressions of people. Firstly, talking about Sri Lanka as a country, I think the first impression I have is that the people of Sri Lanka are truly blessed. They have a beautiful country and a strong economy and at the same time a secure environment. What one really sees when you look around is happiness, happy faces. We’ve been visiting a couple of consumer homes and we see that positivity in the people of Sri Lanka.
The second one, talking again about people but about people within the organisation, I would say that there is a lot of warmth and within two months of being here, one already feels like it’s home. It’s really not about feeling like an expatriate anymore, you feel at home. That’s a big positive impression. The people of Sri Lanka have a lot of energy and there’s a very positive attitude of ‘let’s get things done’.
My focus has been on understanding people in the first two months. I am coming from the South Asia region based in India and I’ve been visiting Sri Lanka for the last eight years or so because I was looking after the food business for the South Asia region. I’ve been in and out of Sri Lanka quite a bit in the last few years and I sense a very positive attitude among the people.
Q: In your new post, you are responsible for the management of Nestlé’s operations both in Sri Lanka and the Maldives. What are your plans/vision for Sri Lanka and what steps have you taken so far to implement them?
A: In terms of vision, I would say that our vision is that Nestlé Lanka should contribute towards enhancing the quality of life of Sri Lankan people. We are going to do this in two ways.
On the one hand we are going to contribute towards the nutrition, health and wellness of the people. On the other hand, we will make a contribution towards the development of the rural economy. These are the key ways in which we believe we can enhance the lives of Sri Lankans.
Talking first about nutrition, health and wellness, it is our global ambition to be the leader in nutrition, health and wellness and I’m sure you’ve heard this previously. However, what it means for us very specifically is that the first thing we need to do is understand what nutrition means for the consumer and what issues the consumer is facing today with regard to nutrition.
The second aspect is that we need to make people aware of various aspects of nutrition, how we can address the daily challenges that they face. For example, one of the challenges that mothers face today is that kids are not spending sufficient time out playing. It is this understanding and then we play a role in that.
The third aspect is about our products themselves. We have to continuously innovate and renovate our products to be able to provide them with solutions for health and wellness.
Q: Are there any problems unique to Sri Lanka in terms of nutrition, health and wellness?
A: I think there are two facets. When it comes to lifestyles, I think this is something that is impacting consumers around the world because people are increasingly leading a sedentary lifestyle. It’s something which a mother faces as a challenge today that kids are sitting in front of the television as opposed to being out in the field.
This is an area that we in Sri Lanka have been focusing on heavily because our programs are directed at encouraging them to play and engage in activities like various kinds of sports and running. We have been bringing consumers various initiatives like the marathon, we have engaged with the Athletics Association, etc., so we are trying to encourage people to lead a healthy lifestyle, especially via school sports initiatives by the company.
I would say that a lot of good work has been happening and we’re going to continue to build on the many initiatives that have already been put in place in the market. More specifically, when it comes to the products, we’re looking at driving this in a big way, to see how we can innovate and renovate to enhance nutrition in our products. That is something I will be stressing on a lot going forward.
Q: What is Sri Lanka’s role in contributing to Nestlé’s vision for the South Asian region?
A: The vision of Nestlé Lanka is completely aligned with the vision for the Group as a whole, which is to be the leader in nutrition, health and wellness. Specifically I think for markets like Sri Lanka, as is the case for other South Asian markets, our contribution is that we have to be a growth driver.
Very clearly, emerging markets have to contribute towards driving growth for the Nestlé Group as a whole. For us in Sri Lanka, what it means is that we build on our successes, we build on our good results, and we will accelerate going forward.
Q: How has Nestlé Lanka performed financially in the last year and what steps will you take going forward to accelerate the growth trajectory?
A: Despite prevailing market conditions posing significant challenges in 2014, the company continued to deliver a stable and consistent performance. Nestlé Lanka PLC posted revenue of Rs. 8 billion for Q4; and recorded revenue of Rs. 32.9 billion and growth of 6.4% for the full year ending 31 December 2014.
The company posted profit of Rs. 615 million for Q4 and profit of Rs. 3.8 billion for the year ending 31 December 2014, an increase of 14.2% from the previous year, supported by efficient management of the portfolio and value chain optimisation.
The Board approved a second interim dividend of Rs. 28.50 per share on 19 February and has proposed a final dividend of Rs. 28 per share for the year ended 31 December 2014, to be approved at the company’s Annual General Meeting to be held on 12 May.
In terms of acceleration, there are three aspects. The first is that we are going to invest in our brands, secondly we will invest in our people, and the third is we will focus on innovation and renovation. We have the strength already to do it and if we can put the investment behind people, our brands and building our portfolio, I am sure that we can get acceleration.
Innovation and renovation is something we always focus on. As far as our products go, renovation is really saying that every single day we want to make our products better – it could be about adding nutrients, it could be about some other aspects of renovation, and so on. There’s innovation as well; we’ve had a couple of innovations in the last several years and we will put more thrust on that.
Q: What are the immediate challenges for Nestlé Lanka and what do you see as key challenges in the medium term?
A: If you talk about the short-term challenges, one of the challenges organisations like ours are facing is that household expenditure is quite high, as a result of which the savings that are available with our consumers to pick food products like ours is limited. I think the attempts that have been made right now to increase the people’s purchasing power will be a very good initiative in that direction, making sure that we can drive growth of our food and beverage categories.
There are also certain aspects such as price interventions, etc., which do pose challenges, but we believe that these are short-term and are not going to impact us in the long run.
In the medium term, it’s really about ensuring that we have a portfolio that meets the needs of the changing consumer. The consumer is changing quite rapidly – in terms of income, in terms of attitude and in terms of the fact that there are more and more working women. Our product portfolio has to adapt to that and I think the biggest challenge for us will be to make sure that we have a pipeline that addresses consumers’ needs.
Q: Is there a negative impression of any of your products in the local market?
A: No. As an organisation Nestlé is ranked very high. We recently concluded a survey with a very large base of consumers, where Nestlé came number one across various corporates in terms of the trust consumers have in our products and in terms of the fact that we offer consumers the tastiest and healthiest food choices. In a way consumers already see us as a leading nutrition, health and wellness company.
By and large the feedback we have from our consumers – and we have tested this very recently – is positive towards Nestlé.
Q: Are there any investments in the pipeline for Sri Lanka?
A: When it comes to investments, I would like to start with the fact that we are investing in people and in our brands. Talking first about those two aspects, we invest in building our brands and bringing them to the consumer in a way that we provide them with solutions and not just products. That comes back to the kind of initiatives that we spoke about on athletics and so on.
We will invest in people and in research and development. What this leads to is that, when we are able to invest in our people and in our brands and we are going to accelerate, a result of that is you are going to get investment in capacity enhancement. That is one aspect.
The other aspect is on the vision that I spoke about, which is contributing towards the rural economy. I think you are already very familiar with the fact that we are doing a significant amount of work in terms of daily development. We are collecting milk directly from 18,000 farmers every single day and collecting coconuts from 5,000 farmers in the country as well. We will continue to invest in this aspect as well. That’s our contribution beyond the company to the economy. We made a contribution of Rs. 5.1 billion to the rural economy last year.
Q: Where would you like Nestlé Lanka to be in the next five to 10 years?
A: First and foremost I would like to say that Nestlé is a very strong and deep-rooted company in Sri Lanka; we’ve been here for 100 years. When we look at the future, we’re looking at the next 100 years; we’re not looking at what we can do in the next one, two or five years.
Very clearly our objective is to be a leader in providing the consumer with nutrition, health and wellness and I would like to say that personally for me, it’s not about the results that we can achieve in one, two or five years – it’s really about sowing seeds for the future. I would look at my vision as ‘how can we build the seeds for the next 100 years?’ instead of the next few years.
Q: Your views on Sri Lanka’s growth, trends and opportunities in South Asia?
A: As far as the trends in Sri Lanka go, there is something going very well for Sri Lanka. The first aspect is that if you look at the per capita GDP, it’s among the highest in the region and it’s also growing at a positive level.
The second trend which is very interesting for us is the changing income pyramid. You can see that consumers at the bottom of the pyramid are moving up. There’s portability, people have a positive attitude, and they want to lead a better life.
The third important trend I would say for organisations like us is that the whole urban-rural divide seems to be diminishing now. To me these are the very important aspects that are positive trends.
I think we also have some challenges and we would like to see how Nestlé can contribute to addressing some of them. The one perhaps that I can speak about is challenges on health.
Today we know that there are a lot of micronutrient deficiencies in the country and therefore what we would like to do to address that trend towards these deficiencies and health concerns is bring out products that can help consumers address these aspects.
We have some products that cut across the region and we have several products that are specific to Sri Lanka. The nutrients that we provide in our products here are specific to Sri Lanka. It is not that we will put in nutrients just because we do it globally; we will have nutrients that are relevant for the local consumer. Some of our products have been developed here and have gone well beyond Sri Lanka’s shores – for example, Nestlé Coconut Milk Powder was developed here and is now going to 60 countries.
My point is that if we develop products that meet nutrition needs, they have to be relevant to local consumers. We have to meet local requirements both in taste and in nutrition and we are committed to doing so.
Nestlé Lanka is a local multinational. Despite being a global company, we position ourselves as a local multinational and believe we are a local company with the advantages of Swiss culture, DNA and values.
Pix by Daminda Harsha Perera