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October 5, 2026
Sagar Malviya, Economic Times
5 October 2026
Reliance Retail and 7-Eleven are ending their five-year franchisee deal in India, closing most of the nearly 60 convenience stores they operated under the partnership, after struggling to make the format profitable, people familiar with the matter said.
A handful of outlets are clearing the inventory before shutting, they said. 7-Eleven may look for another Indian partner to keep a foothold in the market, although no decision has been made, the people said.
The exit highlights an unusual squeeze that convenience stores are facing in India, with millions of small kirana stores that have long served consumers’ immediate needs on one side and quick-commerce companies that are bringing the same snacks, groceries and daily essentials to doorsteps within minutes on the other.
Reliance and 7-Eleven did not respond to ET’s queries.
The partnership, struck in 2021, was intended to bring the world’s largest convenience-store chain to India through Reliance’s retail network. But the business struggled to achieve the scale needed to offset the relatively high costs of running branded stores.
The 7-India Convenience Retail venture reported revenue of about ₹92 crore ($10.6 million) and a net loss of nearly ₹90 crore in the year ended March 2026, according to its financial statements.
“Reliance wants to reach consumers across every channel, but sustainability ultimately matters. Convenience stores have faced increasing pressure from quick commerce since the pandemic, with both formats offering similar assortments and serving the same immediate-needs occasions,” said Devangshu Dutta, founder and CEO of Third Eyesight, a consumer-sector consultancy.
“Kiranas operate with far lower overheads and different margin expectations than corporate-run convenience stores. Reliance’s exit could therefore signal a broader rethink of the format, particularly in markets where quick commerce has become a strong alternative.”
Globally convenience stores have become powerful retail businesses in several markets despite the expansion of supermarkets and hypermarkets. 7-Eleven in Japan, Taiwan, Thailand and Singapore; Lawson in Japan and Oxxo in Mexico are among the largest retailers in their respective markets.
7-Eleven’s Japanese parent, Seven & i Holdings, operates more than 85,000 stores globally, making it one of the world’s largest retail networks. Yet the company has been restructuring its overseas operations and closing stores in North America as consumer behaviour and store economics change.
In India, however, organised convenience retail has struggled to replicate the success seen in other Asian and emerging markets. EasyDay, More and Spencer’s have either shut stores or shrank their smaller-format networks over the years, underscoring the difficulty of building profitable neighbourhood stores at scale.
Packaged consumer goods companies continue to derive roughly three-fourths of their sales from small neighbourhood stores, underlining the strength of the traditional distribution network. Quick commerce platforms are, meanwhile, expanding rapidly.
That makes it difficult for organised convenience stores to charge a premium or generate sufficient sales density to cover higher rents, staffing, inventory and logistics costs.
Convenience retail works best when operators achieve high store density and productivity, supported by strong supply chains and differentiated offerings such as fresh food and private labels.
Reliance initially expanded the 7-Eleven network in Mumbai and other markets, but the footprint remained small compared with the company’s wider retail operations.
(Published in Economic Times)
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September 26, 2026
Kartikay Kashyap, Brand Wagon/Financial Express
25 September 2026
Walters Burger and Sweet Bengal could turn out to be the lynchpin of Speciality Restaurants’ expansion plan this year, helping it capture the fast-growing high-margin quick service restaurant (QSR) and cloud kitchen markets. Known for its sit down fine dining brands like Mainland China and Oh! Calcutta, Speciality Restaurants is working to expand a smaller selection of highly scalable brands. By aggressively rolling out physical stores alongside integrated cloud kitchens, like it has done across Mumbai and Pune, the 34-year old brand is looking to establish a massive delivery footprint with a highly optimised overhead.
Take designed-for-delivery Walters Burgers, for instance. Instead of offering massive, vertically stacked burgers that turn messy during delivery transit, it specialises in pairs of medium-sized, structurally sound gourmet burgers designed for a one-handed, mess-free eating experience.
This structural integrity makes it perfect for both high-volume delivery channels and curbside pickup.
Anjan Chatterjee, CMD, Speciality Restaurants, says Walters Burgers allows the company to “participate in the large and growing QSR/gourmet-burger opportunity through a format that is scalable and can address a younger consumer base”.
For its part, Sweet Bengal, rooted in Bengali culinary heritage, has a significant potential to take traditional sweets and gifting beyond their existing markets.
“Together, they demonstrate that our expansion strategy is not dependent on one format or one price point,” Chatterjee says. “We are building a portfolio across occasions ― from everyday consumption and affordable indulgence to premium dining and traditional gifting ― while leveraging the strength of our existing brands.”
As the food industry grapples with ingredient inflation, high cost of fuel and slowing discretionary spending, the company’s expansion strategy is going to be “cautious and sustainable”. It will open 20-25 new outlets every year.
Devangshu Dutta, founder, Third Eyesight, believes that Speciality Restaurants’ multi-brand portfolio spanning diverse cuisines, price points and formats has given it the opportunity to diversify risk during these uncertain times. “Restaurants are vulnerable to fashionability and economic swings like other discretionary, lifestyle businesses. Catering to varied dining occasions ― from casual impulse buys to premium dining ― the company has a wide consumer base, with a cushion against changing consumer preferences,” says Dutta.
Starting his journey in 1992 with a 40-seater dining outlet, Only Fish (now Oh! Calcutta), in Mumbai, the company’s house of brands now includes Asian and Oriental offerings Mainland China, Asia Kitchen, GONG and HAKA; North Indian and royal Mughal flavours Riyasat and Sigree, and buffet formats Global Grill and Flame & Grill. It launched Siciliana earlier this year to offer Italian flavours. In June, Chatterjee’s son Avik took over as CEO and currently holds the reins of its expansion engine.
Recipe for success
Speciality Restaurants operates 118 outlets and has a large presence in the Eastern and Western parts of the country. It operates Oh! Calcutta and Mainland China in Delhi and is planning to launch Gong in Vasant Kunj, Delhi, soon. The Kolkata-based company sees opportunities across markets like the National Capital Region, Chandigarh, Jaipur, Lucknow, among others. “Our expansion will remain market-led rather than driven by geographical presence. With a diversified portfolio, we have the flexibility to identify the right brand and format for the right market,” says Chatterjee.
But operating a disparate range of brands has its own set of challenges. “Managing separate supply chains for vastly different cuisines introduces complexity and cost,” says Third Eyesight’s Dutta.
Also, every new brand entails developing a separate brand identity. “They cannot follow the same marketing playbook for every brand,” says Ankur Bisen, senior partner, The Knowledge Company.
One might argue that many FMCG companies also have a large portfolio of brands, addressing the needs of different cohorts. But Bisen says product segments and services segments have different business realities. “The fixed cost is fairly low in the case of product companies which is why large FMCG companies can launch or manage multiple brands simultaneously. But the fixed cost in the food services sector is relatively high,” he shares.
Ken Research estimates that India’s food services market was around ₹7.1 lakh crore in 2025 and is expected to grow at a CAGR of 7.7% to touch ₹11.9 lakh crore by 2032. QSR chain majors Jubilant FoodWorks, Devyani International, Sapphire Foods India, Westlife Foodworld and Restaurant Brands Asia dominate the sector.
But Speciality Restaurants proposition of a diverse set of cuisines and formats targeting different sets of consumers might actually be its trump card. Brand building is Speciality Restaurants’ forte, says Naresh Gupta, CSO & managing partner, Bang In The Middle, and it also knows the formula to scale.
(Published in Brand Wagon / Financial Express)
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September 1, 2026
Vikash Tripathi, Outlook Business
1 September 2026
Eight decades ago, the ‘nationalist businessman’ GD Birla helped prepare the ‘Bombay Plan’, which asked the state to pro-vide for the bare minimum needs of its people. His plan asked for 2,800 calories of well-balanced food per day, 30 yards of clothing per year and 100sq ft of housing per person.
Today, seventh-generation Aryaman Vikram Birla is betting on an entirely different opportunity: premium dining. “We continue to believe in the remarkable potential of the premium casual dining space, spurred by rising disposable income and evolving lifestyles,” the 29-year-old said after Aditya Birla New Age Hospitality acquired KA Hospitality in 2023.
The Birlas are not alone in trying to cash-in on rising prosperity in India. In the past five years alone, India’s top 10 industrial groups have announced new ventures in consumer-facing sectors or doubled down on existing ones. A rough tally of these investments crosses ₹4.8 lakh crore.
For decades, these same business houses built their dominance in core sectors like steel, power, aluminium, cement and chemicals, laying the industrial backbone of the economy. This helped the nation become a large producer of such goods and, in some cases, an exporter as well.
But as India’s economic conditions changed, so has the focus of its largest conglomerates.
For the likes of Tata, Aditya Birla, Bajaj and Bharti, that journey started way back. “What has changed in recent years is the speed and openness of the amount of capital being invested,” says Jitender Kumar, associate professor and programme chairperson, retail management programme at Birla Institute of Management Technology.
“It is not ‘opportunistic’ reasons, it’s structural reasons.”
Two factors seem to be driving the shift: the first is the arrival of an affluent consuming class that can buy branded and premium goods, and the second is the attraction of consumer businesses as a way to diversify revenue and, in some cases, improve the quality of earnings.
The Rise of Affluence
A couple of decades ago, if an Indian household had some extra cash, it often meant buying more of the same. Today, it increasingly means buying better. Even salt is being upgraded, from iodised to Himalayan pink or rock salt. The same shift is visible in bigger purchases: sports utility vehicles (SUVs) over hatchbacks, and ₹1cr-plus homes over budget flats.
But India isn’t simply consuming more. It is moving from basic consumption towards discretionary, branded and premium consumption. This boom is most clearly seen in the rapid expansion of the financial infrastructure that enables consumption. Formal retail credit penetration has more than doubled over the past decade, according to a TransUnion Cibil report, driven largely by personal loans, credit cards and consumer durable loans. Meanwhile, the government-backed Unified Payments Interface has untethered spending from the cash in a buyer’s wallet.
The signs show up across the broader consumption economy. Homes priced above ₹1cr accounted for 54% of total sales in 2025, up from just 30% in 2023—the market that decorative paints and home solutions are chasing.
Out of 4.7mn cars sold in the financial year 2025–26, SUVs accounted for more than half.
“The consumer market has grown substantially—not only through rising incomes but also the dramatic expansion of branded consumption across product verticals,” says Devangshu Dutta, founder of management-consulting firm Third Eyesight.
The bets are also getting more varied, from Reliance Retail tying up with global brands like Fenty and Skims to the Bharti Group bringing Olive Garden to India.
The Lure of Returns
For a passenger walking through an airport, the flight is only one part of the journey. There is coffee before boarding, food between flights, a lounge, retail outlets, parking and a host of other things to spend money on. For Adani Airports, those non-aero businesses are increasingly becoming the more lucrative part.
Its non-aero operations already generate about ₹2,500cr, with returns in the high-20% range, against roughly 12% from regulated aeronautical operations.
Jeet Adani, director of Adani Airport Holdings, expects the share of aeronautical revenue to fall to around 10% of total revenue, with non-aero becoming the bigger growth driver. The motivation can be seen as an escape from a return ceiling as much as a bet on rising affluence.
As Kumar puts it, consumer businesses help the conglomerates in two major ways. First, they help insulate them from volatile and often punishing commodity cycles, and second, they often offer far better returns with lower capital intensity and faster cash conversion.
Reliance Industries (RIL) shows how significant that shift can become. By 2025–26, its consumer-facing arms, Jio Platforms, Reliance Retail Ventures and Reliance Consumer Products, together contributed over 40% of group revenue and nearly 60% of operating profit.
And there is another advantage. “A small business, when it wants to build a new venture, faces constant margin pressure and often has to build its supply chain from scratch. A large conglomerate can leverage its existing scale, infrastructure and supply chain to enter a new business far more efficiently,” explains Kranthi Bathini, equity strategist at WealthMills Securities.
Different Strokes
In chasing consumers, some conglomerates are following the fastest-growing categories, while others are using their existing industrial capabilities to enter consumer-facing businesses. One is trying to build an entire ecosystem around it. But the lines between these approaches are not always clean.
Tatas is doing both: building entirely new consumer brands while also using the industrial ecosystem it has built over decades.
For Tatas, the consumer opportunity has largely been about following where spending is moving. Their consumer ventures have followed this arc longest. It began decades ago with Lakmé (1952), Tata Tea (1962) and Titan (1984). Tanishq and the expansion of Trent under brands such as Zudio are only the latest examples.
At Tata Consumer Products, once largely a staples business built around salt, tea and pulses, the focus has been shifting towards value-added foods and beverages, with ₹7,000cr spent on the acquisitions of Capital Foods and Organic India in 2024. Across companies such as Tata Digital, Indian Hotels, Air India and Tata Motors Passenger Vehicles, the group has announced close to ₹93,180cr in investment over the past five years.
Aditya Birla’s jewellery chain Indriya and its move into premium hospitality belong to the same category of ‘pull-based’ diversification.
JSW is taking a different route. It is taking its existing industrial strengths one step closer to the buyer. The group, which has traditionally been focused on areas such as steel, energy and cement, has expanded into consumer-facing areas such as auto, paints and home solutions.
It launched JSW Paints in 2019, and acquired a controlling stake in paintmaker AkzoNobel India for ₹8,986cr last year. Its strategy is to leverage an established network of contractors, dealers, architects and builders to reach consumers.
The same strategy can be seen in its push into autos, acquiring a 35% stake in the Indian unit of China’s MG Motor in 2024, leveraging synergies with its established steel business.
At Tatas, too, group companies like Tata Steel, Tata Power, Tata AutoComp, Tata Technologies and TCS are doing significant businesses with Tata Motors.
Adani is also using an asset it already controls to move further into the consumer’s wallet. Adani Airports announced a ₹20,000cr investment in June to develop hotels, retail, entertainment and commercial infrastructure around its eight airports, and has signed hotel management agreements with IHG Hotels & Resorts for five hotels. City-side developments could contribute 30–40% of Adani Airport Holdings’ non-aero revenue.
Yet another example of the extension strategy is Aditya Birla Group’s attempt to diversify from cement, metals and textiles into decorative paints with Birla Opus.
RIL took a different approach: trying to connect multiple consumer businesses into one ecosystem. It expanded its retail network through new formats and acquisitions, added brands and partnerships, and then built a consumer-goods business around acquisitions such as Campa Cola and Lotus Chocolate.
That expansion was helped by billions of dollars raised by both Jio Infocomm and Retail Ventures from foreign investors in 2020. The group now plans to spend another ₹8,000cr expanding consumer goods manufacturing. The advantage of having that kind of scale is clear. If RIL has Ajio at a mall and, next to it, GAP and Herschel, it can negotiate better rental terms.
For conglomerates, Kumar points out, the next level of competition will not be based on investment, “but on the ability to create different consumer experiences, foster innovation and create lasting brand loyalty through the integration of these capabilities”.
Can Scale Win?
When Reliance Fresh opened its first stores in 2006, it was part of a rush by some of India’s biggest business groups to crack organised retail. Aditya Birla Group, RP-Sanjiv Goenka Group’s Spencer’s and Kishore Biyani’s Future Group were all betting that organised retail could transform the way Indians shopped. What followed was years of experimentation, losses and, for some, eventual retreat.
Birlas essentially gave up on grocery retail after a decade of heavy losses and exited entirely.
Future was pushed into insolvency after a controversial ₹24,713cr deal with RIL. Spencer’s is still trying to find its footing, with ₹249.33cr in net losses in 2025–26.
Conglomerates may have deeper pockets, but that does not automatically make them better at selling to consumers. India has seen some of those bets fail or take years to work. And even among today’s biggest players, the results are still mixed.
Tata Sons has been in this segment longer than the Ambanis, yet its consumer businesses still make up less than 40% of its total revenue —a share that has not changed since 2020.
These groups have what most standalone consumer companies don’t: capital, distribution, infrastructure, brands, scale.
But winning consumers takes something else entirely—reading what people want, building brands, innovating fast and earning loyalty.
“In B2B [business to business], it’s about manufacturing at scale, getting your costs down. Then you can compete. In B2C [business to consumer], it’s all about the product. With the right product at the right price, you have a chance to win in the market,” Parth Jindal, managing director of JSW Cement and JSW Paints, told Outlook Business in 2025.
Tata Sons’ chairman N Chandrasekaran hit the same wall while revamping the group’s consumer unit. “I have the money. But I don’t have the team to run it,” he had told Sunil D’Souza while hiring him to lead Tata Consumer Products in 2020.
Reliance and Tatas have had the longest head start, but even their journeys show how difficult it is to turn scale and capital into consumer businesses. Birla, JSW and Adani are now trying to make that transition in their own ways.
A longer tail—Bajaj in hospitals, L&T in retail finance and education, Mahindra in insurance and hospitality, Murugappa in electric mobility—is playing it safer, going deeper into what it already owns rather than chasing new categories.
What ties them together is a bet on consumers buying not just more but better, and on those consumers being worth more per rupee of capital than the industrial customers who built these houses.
The prize is growing, but so is the competition. Capital and scale may get these conglomerates through the door. They won’t guarantee a seat at the table.
(Published in Outlook Business)
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August 26, 2026
Praveen Paramasivam, Reuters
26 August 2026
India’s Tilaknagar Industries, is open to another large deal after its nearly $500 million purchase of the Imperial Blue whisky brand from Pernod Ricard, a top executive said, as consolidation gathers pace in India’s liquor market. Deals, including United Spirits’ purchase of Nao Spirits and Sazerac’s stake in John Distilleries, underscore growing investor interest in India’s spirits industry as liquor makers seek to broaden portfolios and gain scale.
“Definitely we will” consider another deal on that scale if the right opportunity emerges, Chairman and Managing Director Amit Dahanukar said. “Before Imperial Blue, I would have never given a target number which had two times our revenue.”
The maker of Mansion House brandy is open to any spirits category on acquisitions, Dahanukar said. “From an M&A perspective, we remain focused on the craft spirits space within the high-growth super premium and luxury segments,” he added.
Dahanukar did not disclose how much the company had set aside for potential deals. He said Tilaknagar would be “disciplined” in financing future acquisitions, citing the mix of debt and equity used for the Imperial Blue purchase.
The Imperial Blue acquisition has already transformed Tilaknagar’s scale. Revenue nearly tripled to 10.26 billion Indian rupees ($107.46 million) in the first quarter ended June 30, with the whisky brand accounting for nearly two-thirds of total sales volume.
Industry fragmentation and state-level regulations make it difficult for liquor makers to build national scale, creating incentives for consolidation, said Devangshu Dutta, founder of retail consultancy Third Eyesight.
India is expected to become the world’s largest spirits market by volume by 2032, surpassing China as millions of consumers reach legal drinking age each year, according to alcohol industry data provider IWSR. ($1 = 95.4800 Indian rupees)
Reporting by Praveen Paramasivam in Chennai; Editing by Dhanya Skariachan and Anil D’Silva
(Published on Reuters)
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August 11, 2026
Samar Srivastava, Forbes India
11 Aug 2026
Ask someone what an exurb is and chances are you’ll be met with a blank stare. Few city slickers would have heard of the term, let alone visited one. Located about 90 minutes from Gurugram, Ateli fits the description perfectly.
The drive is deceptively easy. Wide highways, sparse traffic, and long stretches of open countryside gradually give way to a settlement that feels oddly familiar. “If you’d had shut my eyes and brought me here, I’d have said we weren’t too far from Gurugram,” says Manish Tiwary, 56, managing director of Nestlé India.
Ateli is a residential settlement that has grown around its agricultural market. Cars jostle with cattle for road space. Kirana stores spill onto narrow streets.
Labourers gather at intersections in search of daily wage work while small factories, unfinished commercial buildings, and modest homes stand shoulder to shoulder. It has the look and feel of the outskirts of any fast-expanding Indian city.
Yet beneath that ordinariness lies something far more significant. With a population of barely 9,000, Ateli represents the kind of semi-urban India that is rapidly emerging as the country’s next consumption frontier. Rising incomes, better roads, deeper internet penetration, and easier access to branded products are narrowing the divide between metropolitan India and its smaller towns.
For Nestlé India, places like Ateli have become central to its next phase of growth. Tiwary, who took Forbes India through the town on a cloudy May morning, is convinced that India’s consumption story is changing. “The aspirations are the same,” he points out. “What sells on the fringes of an urban market is similar to what sells here.”
Whether consumers live in Gurugram or Ateli, they increasingly want the same products, brands, and experiences. The challenge for companies is no longer generating demand; it is ensuring that products are available where consumers want them, and at prices they are willing to pay.
Remapping the route
The conviction is informed by experience. Before taking over at Nestlé India, Tiwary headed Amazon India, where he watched demand for smartphones, air conditioners, diapers, and other discretionary products steadily spread beyond India’s largest cities. Consumer aspirations, he realised, were travelling much faster than traditional distribution networks.
Getting Maggi noodles, Nescafé coffee or KitKat chocolates into thousands of towns like Ateli, however, is a far more complicated proposition than shipping electronics through an ecommerce warehouse. On a per item percentage basis, the cost of distribution is higher, there are also more varied stock keeping units (SKUs) and the frequency of consumption means replenishment has to be faster. Fast-moving consumer goods (FMCGs) are low-ticket, high-frequency purchases. Margins are thinner, replenishment cycles are shorter and distribution economics are far more demanding.
Nestlé’s answer has been a patient, years-long investment in rebuilding its route to market. “Earlier, the company was over-indexed on urban India but the focus has now shifted to rural India,” says Amit Agarwal, SVP, fundamental research, Kotak Securities.
The timing appears to be fortuitous. Nestlé kicked off the June quarter with another strong performance, reporting a 48 percent jump in net profit to ₹975 crore, on a 25 percent increase in revenue to ₹6,378 crore. With this the company continued the strong performance it posted in the year ended March 2026. March quarter revenue and profits were up 23.1 and 22 percent respectively. The management attributed the performance to strong volume growth, wider distribution, and continued traction across both urban and rural markets, while cautioning that inflation in commodities such as cocoa, edible oils, and sugar remains a key watchpoint.
Investors have taken notice. Nestlé India’s shares have risen around 16 percent over the past year, giving the company a market capitalisation of roughly ₹2.79 lakh crore. At about 80 times forward earnings, it commands the richest valuations in India’s consumer sector, trading ahead of multinational peers such as Hindustan Unilever (HUL) and Colgate-Palmolive as well as domestic rivals Dabur, Marico and Godrej Consumer Products.
The premium reflects more than strong quarterly earnings. Across corporate India, companies that invested early in brands, distribution and execution are beginning to pull ahead as consumption gradually recovers. Listed liquor companies such as United Spirits and Radico Khaitan have continued to post double-digit revenue growth, reflecting resilient discretionary spending. Automobile manufacturers have benefited from lower financing costs and tax relief, particularly in entry-level motorcycles and small cars. FMCG companies with a meaningful rural presence have also reported improving volume growth.
The recovery has been uneven, but the direction is becoming clearer. According to NielsenIQ, rural India has outpaced urban markets in FMCG growth for eight consecutive quarters, with improving household incomes and higher spending in smaller towns driving much of the momentum. For companies that have spent years investing in distribution rather than chasing short-term margins, the payoff is beginning to manifest.
Nestlé believes it is particularly well positioned. Its categories—coffee, chocolates, baby food and noodles—remain under-penetrated compared with staples such as biscuits, soaps and toothpaste. That gives the company a rare opportunity: Not merely to take market share from rivals, but also to create new consumers. That ambition begins in places such as Ateli.
Direct Push
Ground zero for Nestlé’s rural strategy is Rakesh Kumar’s 12-by-12-foot kirana store-cum-warehouse in Ateli. The 35-year-old, who comes from a farming family, has been running the shop for more than a decade. The biggest change, he says, is not the number of customers walking through the door, but what they are buying. Alongside soap bars now sit oats, muesli, coffee, soups and Cerelac baby food.
“These are products no one was interested in five years ago,” Kumar says. “Now we get steady enquiries because people have become far more health conscious.” The shop’s shelves tell the story of India’s changing consumption patterns. Kumar stocks products from dozens of companies—from ITC and Perfetti to Ferrero and Keya—but his store also offers a glimpse into how the country’s FMCG distribution model is being rewritten.
A decade ago, retailers like him were supplied largely through wholesalers. Consumer companies concentrated their own sales forces in larger towns where inventory turned faster, leaving intermediaries to service smaller towns and villages.
It was an efficient system: Mass television advertising created demand, wholesalers ensured products reached retailers in a cost-efficient manner, and shops became the last mile of India’s consumption engine.
That model is now under pressure. Modern trade, ecommerce and quick commerce have chipped away at distribution as a competitive moat. Digital advertising has fragmented audiences, while nimble direct-to-consumer (D2C) brands have intensified competition across categories.
Simply reaching consumers is no longer enough. Companies increasingly need to know what consumers are buying, how quickly tastes are changing and which products are beginning to gaining traction.
Nestlé’s response has been to rethink rural expansion itself.
A re-run
“It has become more holistic and comprehensive,” says Sushrut Nallulwar, sales director at Nestlé India. Distribution remains the backbone of the strategy, but it is now supported by technology, locally relevant marketing and products designed specifically for different consumer segments. “It’s not just about scaling up route-to-market infrastructure anymore.”
Tiwary has watched this move before. During his years at HUL, the company dramatically trebled its rural direct footprint after identifying villages and small towns as the next engine of growth. The then chairman Harish Manwani famously told shareholders that though competitors were creating gaps, HUL had to “continuously create new gaps”.
Nestlé is now following a similar philosophy, albeit for a very different retail landscape. Retailers such as Kumar, who once depended almost entirely on wholesalers, are increasingly serviced directly by the company.
The economics are demanding. Serving thousands of retailers, each buying between ₹1 lakh and ₹5 lakh worth of products every month, requires warehouses, technology, logistics, credit management and a large field sales force. “The number of outlets is less important than what direct distribution gives you,” says Nallulwar. “It gives you control.”
Today, Nestlé reaches roughly 6 million retail outlets across India, of which around 2 million are serviced directly. Those outlets account for nearly 75 percent of the company’s sales, giving it far greater visibility of consumer behaviour than a traditional wholesale-led model.
While distribution models vary across FMCG companies, wholesalers continue to account for a much larger share of sales for most players. Nestlé estimates that wholesale contributes about 20 percent of its business compared to an industry average of 40 to 45 percent. The company is effectively choosing to incur higher distribution costs in return for better market intelligence and tighter execution.
Buying better data
Every direct interaction with a retailer generates information. Nestlé learns which products are moving fastest, which pack sizes consumers prefer, how frequently shelves are replenished and where competitors are beginning to gain ground. If a rival noodle brand suddenly starts selling well in Ateli—or consumers begin shifting towards smaller packs—the company knows almost immediately.
“Nestlé is essentially buying better data,” says Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy. “That may depress margins in the short term, but it creates a much stronger competitive position over time. Better visibility of what retailers are stocking and consumers are buying allows it to react much faster than a wholesale-led model.”
Control, however, extends well beyond making sure cartons arrive on time. The backbone of that system is increasingly digital. Orders are placed through Nestlé’s retailer app. Field sales representatives capture information on stock availability, competing brands and consumer preferences during every store visit. That information flows back into the company’s planning systems, allowing it to fine-tune inventory, merchandising and product innovation market by market.
For Nestlé, distribution is no longer about moving products. It is about reducing the distance between the consumer and the company’s decision-makers. The insights frequently translate into product decisions. According to Nallulwar, nearly two-thirds of rural FMCG purchases happen at the ₹5 and ₹10 price points, making affordability just as important as physical reach. “It is not just about reaching outlets,” he says. “There has to be consumer relevance in terms of availability at the right price points.”
One example hangs right outside Kumar’s shop.
Seeding the market
Insights from Nestlé’s sales teams prompted the company to redesign its ₹10 Maggi packs. Instead of individual packets, they are now linked together in long strips that retailers hang outside stores.
The redesign wasn’t simply about affordability. In rural India, where shelf space is scarce and many purchases are made on impulse, the hanging strips function as miniature billboards. Nallulwar calls it “aerial visibility”, ensuring the product catches a shopper’s eye before they even step inside the shop.
For Kumar, the benefits are equally tangible. Orders placed through Nestlé’s app typically arrive the following day, giving him faster replenishment and, at times, better credit terms than buying from wholesalers.
On India’s next consumption battleground, speed of information may prove just as valuable as speed of delivery.
Walk around Ateli and those investments are hard to miss. Across from Kumar’s store, retailers have been provided with visi-coolers stocked with ready-to-drink Nescafé, KitKat and other chocolates. “We are still seeding the market,” says Tiwary. “But it is important to be present. Expanding the category is important.”
The opportunity goes beyond instant noodles. Coffee, chocolates and baby food are all beginning to gain traction in smaller towns, but their penetration remains far below that of more established FMCG categories.
Maggi noodles, for instance, has a rural penetration rate of just 10 percent, measured by consumers who have eaten the product during the previous month. The frequency of Maggi consumption is far below the 80 percent for biscuits or 90 percent penetration for toothpastes. When you compare the categories, the size of the opportunity is evident.
“The biggest opportunity for us is that household penetration in our categories is still significantly lower than in developed categories,” says Nallulwar. “There is a large headroom for these categories to grow.”
White Spaces
For most consumer companies, growth comes from taking market share away from competitors. Nestlé believes India’s biggest opportunity lies elsewhere. It is betting that the country’s next consumption boom will come not from persuading consumers to switch brands but from encouraging them to buy products they have never bought before.
This partly explains why the company has spent the past three years expanding its distribution network into towns like Ateli. Getting products onto shelves is only the first step. The real prize is changing what ends up in the shopping basket.
Coffee illustrates the opportunity. For decades, India has remained overwhelmingly a nation of tea drinkers. At just 70 grams per person annually, India’s coffee consumption is a fraction of the global average of 1.3 kg, according to the Coffee Board of India. Europeans consume about 4.5 kg a year, North Americans 5.1 kg, while Finns drink more than 12 kg per person annually.
The gap within India is equally revealing. According to Crisil, urban Indians consume roughly four times as much coffee as their rural counterparts, suggesting that rising incomes and urbanisation could significantly expand the addressable market.
For Nestlé, the opportunity is, therefore, not merely to persuade consumers to switch from one coffee brand to another; it is to persuade millions of Indians to drink coffee in the first place. “Coffee is still a significantly under-penetrated category,” says Sunayan Mitra, director, Coffee and Beverages, Nestlé India. “That gives us a long runway for growth.”
The strategy begins with affordability. Consumers are introduced to the category through ₹2 Nescafé sachets sold at neighbourhood kirana stores and tea stalls. As incomes rise, Nestlé hopes consumers will graduate to jars, ready-to-drink cold coffee, and eventually premium offerings such as Nescafé Gold Blend and Nespresso.
That journey—from an impulse purchase to a premium brand—is shaping how the company thinks of growth. “Ultimately, if I don’t have anything new to offer the consumer, why would they upgrade?” says Tiwary.
The same philosophy applies to other products as well. Take chocolates. Per capita chocolate consumption in India remains among the lowest globally, despite rapid premiumisation over the past decade. Baby food continues to be significantly under-penetrated. Pet food, while growing rapidly, remains a tiny category compared with the developed markets. Even Maggi noodles, as mentioned earlier, reaches only around 10 percent of rural consumers despite being Nestlé’s biggest brand.
Finding these categories has become a business in itself. Nestlé Professional, the company’s out-of-home business, has evolved into a testing ground for identifying such opportunities. Instead of waiting for consumer demand to emerge, the division increasingly searches for fragmented local markets that can be organised around trusted brands.
Two years ago, for instance, the team identified an opportunity in Kerala’s coastal belt, where coconut milk powder is used by restaurants and institutional kitchens. The market was dominated by regional manufacturers with varying quality standards.
Leveraging the familiarity of the Maggi brand and working closely with chefs and caterers, Nestlé began to push its own coconut milk powder. “It was a roaring success—we hit the jackpot,” says Saurabh Makhija, director, Nestle Professional, declining to disclose sales numbers.
The Kerala experiment has since become a template. In Hyderabad, where Irani chai is woven into the city’s food culture, Nestlé segmented bakeries into premium, mainstream and economy outlets before introducing Milkmaid as an alternative to locally produced sweetened milk. Rather than attempting to change consumer habits, the company sought to formalise a fragmented market.
The lesson, says Tiwary, is that India can no longer be viewed as a single consumer market: “It is many different Indias.” A category that barely exists in one state may be mature in another. A product that succeeds in Bengaluru may fail in rural Bihar. The challenge is no longer creating national brands but identifying the thousands of local opportunities. That is where Nestlé believes its investment in distribution begins to pay off.
Every retailer visit, every digital order and every conversation between a salesman and a shopkeeper adds another piece to the puzzle. The next ₹10 product, the next regional launch or even the next national brand may not emerge from a Mumbai boardroom. It may emerge from a kirana store in Ateli.
The Next HUL?
Nestlé’s distribution push, its search for white spaces and its willingness to create entirely new categories have not gone unnoticed by investors. At nearly 80 times forward earnings, Nestlé India trades at a substantial premium to its rivals. The valuation implies investors are looking well beyond the next quarter.
For decades, HUL has been the benchmark for Indian FMCG companies—a business built on unmatched distribution, category breadth and extraordinary execution. Nestlé is unlikely to rival HUL on size anytime soon. But the question is: Can it become India’s next great consumer compounder?
Its investment case increasingly rests on three pillars. The first is distribution. Over the past three years, Nestlé has built one of the country’s deepest direct distribution networks, which gives the company not just reach, but information.
The second is category creation. Unlike many FMCG companies whose biggest brands enjoy near-universal penetration, several of Nestlé’s businesses—coffee, Maggi noodles, pet food, chocolates and baby—are in the early stages of their growth curves, giving Nestlé an unusual advantage: It is not competing for market share, but trying to expand the market itself.
The third pillar is moving up the value chain, or premiumisation. A consumer who begins with a ₹2 Nescafé sachet may graduate to a coffee jar, ready-to-drink coffee and maybe a premium blend. The same logic applies to much of Nestlé’s portfolio.
Veteran investor Bharat Shah, erstwhile co-founder at ASK Asset & Wealth Management and now in the process of setting up his own fund, has owned Nestlé’s stock for 30 years before exiting recently. He points out that years of rich profits and fat balance sheets have taken consumer companies’ attention away from adequate innovation and continued adaptability, whether in product or category creation, distribution platform innovation or technology adaptation. This is particularly true for MNCs where decision-making happens in headquarters and so they are behind the curve.
He also points to the dramatic changes in the consumer landscape—the emergence of local brands that chip away national brands, changes in the terms of trade due to the rapid advent of Q-commerce and modern trade, and the need to innovate and premiumise. Many categories have high penetration and so volume growth is hard to get.
On the drive back towards Gurgaon, it is tempting to think of Ateli as just another small town on the edge of India’s economic map. But for Nestlé, it represents the future of Indian consumption.
(Published in Forbes India)
