Nestlé India has announced a joint venture with pharmaceutical giant Dr Reddy’s Laboratories to manufacture and distribute medical-nutrition products and supplements.
Initially, the publicly-traded Nestlé India will hold a 49% stake in the venture, while the Hyderabad-based Dr Reddy’s will own the majority share.
According to a statement filed with the stock exchange, under the terms of the agreement, Nestlé India will possess a call option to increase its stake to 60% after six years “at a fair market value.”
“We have been on a journey where we strive to add value to the lives of our consumers through powerful brands and products. This joint venture is another important step in that direction, allowing us to bring our science-backed nutritional solutions to more consumers across the country by leveraging Dr. Reddy’s robust retail and distribution network,” stated Suresh Narayanan, Chairman and Managing Director of Nestlé India. “Dr. Reddy’s is a trusted name in the pharmaceutical space and shares our commitment to provide access to high-quality products.”
The partnership is set to focus on the Indian market and “other agreed territories,” as outlined in the stock exchange disclosure.
Nestlé India and Dr Reddy’s aim to concentrate on specific health categories including metabolic treatments, hospital nutrition, healthy ageing, general wellness, women’s health, and child nutrition.
The companies expect to operationalise the venture by the second quarter of Nestlé India’s 2024/2025 financial year, which commenced on 1 April.
The announcement coincided with the release of Nestlé India’s financial results for the 15 months ending in March, during which the company reported sales of Rs242.76bn ($2.91bn) and a net profit of Rs39.33bn.
Narayanan highlighted: “Confectionery delivered strong performance, fuelled by KitKat, making India the second-largest market for the brand globally. Our beverages business recorded robust performance.
“Milk products and nutrition witnessed strong growth despite inflationary pressures. Prepared dishes and cooking aids registered strong growth across [the] portfolio led by Maggi Noodles and Maggi Masala-ae-Magic. India emerged as the largest market worldwide for Maggi.”
This announcement follows a recent decision by India’s consumer court which exonerated Nestlé from government accusations of “unfair trade practices” linked to the 2015 lead contamination scare in Maggi noodles.
Addressing the collaboration with Dr Reddy’s and other initiatives, Narayanan remarked: “The pursuit of new platforms and categories is a key component of Nestlé India’s overall growth strategy and reflects our commitment to anticipating and responding to evolving market trends and consumer preferences.”
Nestlé’s 2023 annual report states that the company operates eight factories in India across various sectors including milk products, ice cream, prepared dishes, cooking aids, beverages, confectionery, and its Nutrition and Health Science business.
This month, the Zurich-based NGO Public Eye accused Nestlé of adding sugar and honey to certain infant formulas and breakfast cereals in less affluent nations, a practice not found in Europe. In response, Nestlé assured in a statement to Just Food: “We apply the same nutrition, health and wellness principles everywhere.
“Baby food is a highly regulated category. Everywhere we operate, our portfolio complies with local regulations or international standards, including labelling requirements and thresholds on carbohydrate content that encompasses sugars.
“Over the past decade, Nestlé has reduced by 11% the total amount of added sugars in our infant cereals portfolio worldwide.”