Urban cities in India are grappling with significant challenges as muted demand and rising food inflation impact the market, according to Suresh Narayanan, CEO of Nestle India. Mega cities are particularly struggling, experiencing weak performance in key segments such as milk and nutrition, chocolate, and confectionery. Brands like Munch are facing heightened regional competition, which adds to the pressure on sales.

Narayanan revealed that Nestle India plans to implement further price hikes on coffee due to soaring input costs, specifically citing a dramatic 2.5-fold increase in cocoa prices and a 60-70% rise in coffee prices over the past year. In response to these ongoing cost pressures, the company had already raised prices by 15-30% and vacated lower price points, like the Rs 5 segment, to protect its profit margins, which may hinder consumer accessibility.

In contrast, rural areas are maintaining steady demand, with relatively stable consumption patterns reported. Despite the challenges in urban markets, sales from quick commerce channels have emerged as the largest revenue contributor, showcasing a shift in consumer purchasing behavior.

Narayanan's insights reflect the complexities faced by Nestle India as it navigates a fluctuating market landscape marked by inflation and competition, while also adapting to changing consumer preferences.