Predictably, Nestle CEO Carlo Maria Donati, was all smiles when he met with BT. Initial numbers suggest that the company's mass-market strategy is working and the 55-year old Donati, normally as reticent as only the Swiss can get, was in an expansive mood. The only question he refused to answer had to do with rumours that his good work here has won him a ticket out of India.

Nestle's lower price strategy seems to be paying off. What prompted you to go mass?

In India, when analysing consumer behaviour we came to the conclusion that value for money is one of the key drivers in the purchasing decision. So there are a lot of new products whose price have been constructed to give the best value for money and a lot of existing products that have gone through price reduction.

Was it competitive pressure that forced you to do this?

The competitive environment always keeps price under pressure but I don't think it was that, as much as the consumer.

How has this increased your consumer base? And are you looking at the rural customer too?

The two and five rupee price points are a clear strategy to increase volumes and to penetrate lower social classes but we will probably remain an urban company. In fact I am quite happy today that I have not gone all out to capture the rural consumer. (If we had done so), with the failing monsoon we would have to pay for it.

Your predecessor's reign saw a flurry of launches at Nestle. Your entry was accompanied by a slowdown in this. Now, there has been a pick-up in the launches...

I slowed down. I believe the approach to new products has to be in line with (our) objectives and (with) what can be absorbed by market. Also I believe going all out with a new product is a very dangerous and costly strategy.

So, those descriptions about Nestle being a cautious company are right

We are a cautious and conservative company and very proud of it. In our 140-year history we have not made many mistakes. But at the same time we are not risk adverse.

But your cautious approach has put Nestle far behind the competition in the water business.

What do you mean? You call it cautious because we have not gone for a national launch of water at heavy discounts (to the trade) in order to gain market share. We work with the interest of the shareholder (in mind). We are a listed company. I cannot afford to do what certain unlisted companies do.

Globally, Nestle is a big player in ice creams. Why, then, is the company reluctant to get into this business in India?

When I look at the market here I see a lot of losses. I don't see a lot of profits. Nevertheless , I feel the market is one which needs to be monitored.

Fine, what about biscuits?

It is a high potential market. I think if we were to enter a product category like this it would be at the high-end of the market. Not the low-end which is crowded. My priorities: when I shave in the morning I do not think biscuits but culinary, coffee and infant nutrition.

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