Ten years ago, the milk products and nutrition business of Nestlé India was its growth engine, accounting for half of its revenue. Today, that share has shrunk to a third and the segment has become the company’s slowest-growing business as it focuses on high-growth products.
The milk products and nutrition business—including dairy whitener, condensed milk, UHT milk, yogurt, maternal and infant formula, baby foods and healthcare nutrition—contributed 33.4% of Nestlé India’s turnover in FY26, down from 38.1% in the previous year. This share was as high as 49.6% in CY16, according to the company’s annual reports.
Revenue from the milk products and nutrition group rose 0.7% to ₹7,716 crore in FY26, the slowest pace among the company’s four product groupings. Volumes fell 2% to 122,958 tonnes.
The company’s other segments—prepared dishes and cooking aids, powdered and liquid beverages, and confectionery—all posted an increase in volumes sold. Confectionery products such as KitKat and Munch recorded a 33% increase in revenue and a 25% increase in volumes in FY26.
Nestlé India reported a consolidated total revenue of ₹23,154 crore in FY26, up 14.6% from the previous year and double-digit volume growth.
The revenue share of prepared dishes and cooking aids, a category that includes cereals, pet food and the Maggi range of noodles and sauces, rose from 24% in FY16 to 31.5% in FY26, a close second to the milk products and nutrition segment.
The milk products and nutrition product group “showed resilience delivering steady growth and leading category performance in the latter part of the year,” the company said in its FY26 annual report, which was released on 5 June.
Nestlé India officials did not respond to Mint’s request for comment on the declining revenue share of the milk products and nutrition business.
Local edge
The diminishing share of milk products in Nestlé India’s basket of offerings comes as legacy Indian companies and startups aggressively increase production of milk in tetra packs for longer shelf life and value-added dairy products, including cheese, paneer, curd, ice-cream and protein drinks. In India, dairy cooperative societies have a clear edge over companies.
“Indian players, especially cooperatives, have the advantage in procuring and pricing, which international players do not have,” said R.S. Sodhi, former managing director of the Gujarat Cooperative Milk Marketing Federation, which produces Amul-branded dairy products and is considered the world’s largest farmer-owned dairy cooperative.
He told Mint on Monday that international companies have focused on a few value-added segments like condensed milk and baby food, which did not have many Indian competitors. French foods giant Danone exited the dairy business in India after less than a decade of operations as it struggled to compete with the sheer size of milk cooperatives such as Amul and Mother Dairy.
Indian dairy companies have been as production fell during the summer and packaging and transportation costs rose due to the West Asia crisis. On the other hand, cocoa and coffee prices have fallen from their historical highs of 2025.
Nestlé has been focusing on its premium coffee machines, coffee pods and boutique outlets through in India. This segment contributed the highest pricing and volume growth for Nestlé SA in 2025.
“Liquid milk (operating) margins are usually 5% to 8%,” consultancy firm 1Lattice said in a report on the dairy sector in 2025. In comparison, operating margins of chocolate and confectionary products are 20-25%, it said in its Value Added Dairy Products Industry Report.
Non-core segments
Nestlé’s global parent has already been in streamlining mode as it undertakes steps to exit investments in non-core segments like ice-cream, water, vitamins and supplement brands. Nestlé has already sold most of its ice-cream businesses to Froneri, which was created in 2016 as a joint venture with private equity firm PAI Partners.
Nestlé has identified four pillars of growth—food and snacks, , nutrition and pet care. In 2025, Nestlé acquired a minority stake in Drools Pet Food Pvt Ltd, valuing the company at over $1 billion. Analysts noted at the time that this was Nestle’s bet on a premium, high-growth segment.
According to analysts at Systematix Institutional Equities, Nestlé India may experience slow growth in FY27 as goods and services tax-related boosts drop out of comparison from Q3 onward and sales of Maggi and milks and nutrition return to more typical levels. India slashed GST rates for several products in a major revamp in September last year.
“We also remain watchful of near-medium term margins getting impacted by high brand-building spends, distribution expansion-related costs and lower operating leverage as topline growth eases,” the analysts said in a report on 21 April.
Nestlé India shares have gained 8.9% so far in 2026 compared with a 9.8% decline in the Nifty FMCG index.