New Delhi: Rural India remains one of the biggest growth opportunities for FMCG major Nestle India, which is stepping up investments in brands, distribution and market expansion after delivering its highest-ever operational cost savings in FY26, according to its latest annual report.
Chairman and Managing Director Manish Tiwary said the company had generated record operational cost savings through its structural efficiency programme by using technology to eliminate costs that did not add value for consumers and customers.
The savings were reinvested into brand-building initiatives, including higher advertising and digital spending, stronger consumer activation programmes and deeper market penetration efforts, he said.
Tiwary described rural India as one of the company’s most significant growth opportunities as Nestle India expands its reach beyond smaller towns into deeper rural markets.
“Rural India remains one of our most significant growth opportunities, given both the pace of demand expansion and the headroom we still have to deepen our presence,” he said.
Nestle India, which expanded its rural market presence further from 2025, said rural consumption patterns vary considerably across regions, requiring flexibility in product assortment, pricing, formats and distribution strategies.
“Consumption patterns in rural Bihar can differ materially from those in rural Karnataka in tastes, price points, formats and occasions,” Tiwary said.
It allows to calibrate assortment, pack-price architecture, activation and route-to-market execution to local needs, thereby strengthening category relevance and accelerating penetration, he added.
The company said it has established a presence across around 216,000 villages. Nestle India began its “RUrban” strategy in 2019 to strengthen its presence in smaller towns that bridge urban and rural markets and has since extended its reach into deeper rural areas.
Commenting on the broader operating environment, Tiwary said India’s consumption landscape in FY26 was marked by improving macroeconomic stability and uneven household sentiment.
“Urban demand remained relatively resilient, while premium segments stayed comparatively stable. Rural recovery was shaped by monsoon outcomes, farm income and government support,” he said.
He also noted that geopolitical developments continued to affect energy, freight and key input costs during the year.
Highlighting shifts in consumer preferences, Tiwary said aspirations across India were rising and consumers were increasingly embracing a mix of traditional, local, fusion and international foods and flavours.
“It is our ambition to serve that diversity with creativity, consistency and quality that is uncompromising,” he said.
Tiwary said the company’s primary focus remains on its core brands.
“We believe our existing portfolio offers immense depth and significant headroom for growth. We also strengthened the innovation and renovation pipeline so that our brands stay contemporary, distinctive, trusted and relevant in consumers’ lives,” he said, adding, “We will do fewer things but do them bigger, bolder and better.”
Financially, Nestle India’s revenue from sales increased 14.2% to Rs 23,071.46 crore in FY26. The company, which owns brands such as Maggi, Nescafé, KitKat, Milkmaid and Cerelac, is also continuing its capital expenditure programme and is in the process of setting up its tenth factory in India.
The company reported a marginal decline in its permanent workforce to 8,382 employees in FY26 from 8,419 in FY25. The FY24 employee count stood at 8,736, although the company noted that the figure covered a 15-month period from January 2023 to March 2024 following a change in its financial reporting schedule.
The median remuneration of employees increased 7.3% in FY26, compared with 4.9% in the previous financial year. The remuneration ratio of Tiwary to employees stood at 134:1. He assumed charge as Chairman and Managing Director on August 1, 2025.
The annual report also showed that Nestle India paid Rs 1,024.5 crore in general licence fees, or royalty, to its Switzerland-based group entity Société des Produits Nestlé S.A. during FY26, up 13.91% from Rs 899.41 crore in FY25.
In addition, the company paid Rs 102.47 crore as withholding tax on general licence fees during the year, compared with Rs 89.71 crore in the preceding financial year.
Nestle India obtains access to the Nestlé Group’s technology and intellectual property through General Licence Agreements that support the manufacturing and marketing of its products. Under the arrangement, the company pays royalty equivalent to 4.5% of net sales to its parent entity.
Promoter entities Nestlé S.A. and Maggi Enterprises together held a 62.76% stake in Nestle India as of March 31, 2026.
Last year, shareholders rejected a proposal to gradually increase the royalty rate by 0.15 percentage points annually over five years, which would have raised it to 5.25% of net sales. The increase was proposed to take effect from July 1, 2024, but failed to secure shareholder approval.
“During the financial year ended 31st March 2026, there was no material modification in the terms and conditions of General Licence Agreements, as defined by the Audit Committee and specified in the RPT Policy,” the annual report said.