Best CEOs: Meet Suresh Narayanan, the man steering FMCG giant Nestle towards a steady growth territory

When Suresh Narayanan presented Nestle India’s performance for the quarter ended December at a recent post-earnings call, he began his speech by highlighting the company’s success in spite of a challenging business environment. With inflation running high and demand faltering, at least in the hinterlands, fast moving consumer goods companies like Nestle were being tested to the hilt. That however has failed to dent his resolve of emerging stronger—a habit he has cultivated over his three-decade-old journey in the corporate world.

In fact, if one were to describe Nestle India’s performance under his stewardship as Chairman and MD over the past seven years, there probably isn’t a better phrase than the title of his speech—“Consistency in the face of a storm”. Once nearly decimated by the ban on Maggi noodles, Nestle India under the leadership of Narayanan—the winner in the FMCG category of the BT-PwC India’s Best CEOs ranking—has since emerged stronger than ever despite the odds. Having then served the Swiss giant for 17 years in various roles across regions, Narayanan was flown back to India in mid-2015 to lead the firefighting exercise that the FMCG major needed at the time.

As Nestle found itself in the middle of its gravest challenge involving its biggest brand in India, he was brought in with a simple mandate: put the company back on track. Although, India was not new for him—he had worked in the market for nearly two decades before being assigned to manage Nestle’s operations in Egypt and the Philippines—he knew his return would not be a cakewalk. “I was coming back bang in the middle of a crisis. My first reaction was, why me? To be honest, I didn’t even know the extent of the problem or the full dimension of the damage at that time. But it was also a testimony of the trust the company had in me,” he later recalled.

Born in Bengaluru, Narayanan studied economics at the Delhi School of Economics with an eye on joining the Indian Administrative Service. His career, however, took a turn when Hindustan Lever (now Hindustan Unilever or HUL) visited his campus to hire people and he was one of those selected. Rising through the ranks, Narayanan was heading HUL’s beverages division in India when he was hired as Country MD for Nestle’s Singapore operations, after a year’s stint at Colgate-Palmolive in India. People who have worked with him give equal credit to his overseas stints under some very grueling circumstances—like leading Nestle’s operations in Egypt during the Arab Spring protests in 2010—for his success in India.

Even though Nestle India has come a long way from the Maggi situation, Narayanan’s expertise in crisis management comes in handy often. And as the business environment continues to remain challenging, Narayanan’s decision-making process relies heavily on real-time data and analytics, but his “accumulated wisdom, having dealt with such situations in the past” remains a key element in pushing Nestle to new peaks. But like a responsible leader, he likes to put his accountability ahead of everyone else’s. “If the decision is right, the credit goes to the team; if the decision is wrong, I am responsible as the leader,” says Narayanan, chuckling.

According to him, a lot has changed since he took charge in August 2015. “Over the years, we have delivered penetration and volume growth that was industry leading for most of this period. Secondly, our portfolio is stronger than ever and Nestle leads in multiple categories that it is present in. And third, the pace of innovation is fairly active,” he says. But what keeps him on his toes is an uncertain future that is turning more challenging as the days go by. “I am past the stage where I can acquire, but I am at a stage of giving back, by developing talent. The environment in the future is going to be far more challenging than what I faced,” Narayanan explains.

After placing Nestle on a steady growth path, preparing the company for the future is what Narayanan is focussing on. To strengthen the company’s foundation, he has shifted its focus towards the rural market. For a traditionally urban-centric company targeting middle- to high-income households with its premium offerings, Nestle India is now aiming to increase its reach to around 120,000 villages (with a population of over 2,000 people). In fact, from 40,739 in 2020, Nestle has grown to cover 91,683 villages by 2022-end. According to Abneesh Roy, Executive Director at Nuvama Institutional Equities, Nestle has managed to “strengthen its rurban (rural plus urban) approach by sharpening its geographic focus by increasing distribution points, and going deeper into smaller towns and cities”.

Additionally, to make its decision-making process more robust and agile, Nestle has roped in younger talent who are more tech-savvy than most of its long-serving lieutenants. “Nestle is growing younger by average age and they are all digital natives and not immigrants like me,” says Narayanan. Measures taken over the past few years have already begun to yield results. New product launches since he took charge now account for 5.4 per cent of Nestle’s sales. During the Covid-19 period, its net sales grew by 11 per cent CAGR to Rs 16,790 crore. And, in spite of the steep inflation in commodity prices, its net profit rose by 6.7 per cent CAGR to Rs 2,305 crore in CY22. Nestle’ follows a January-December financial year.

Meanwhile Narayanan, an avid reader and a passionate tennis player, values happiness over the success he has achieved. “Success is ephemeral. God has been kind to me and what I seek is a happy life rather than too much success,” he says, bowing his head in humility.

@arndutt