Nestlé India has flagged rising food inflation and continued volatility in commodity prices, saying it is focusing on productivity and operational efficiencies to mitigate input cost pressures even as it reported strong growth in the September quarter.

“Rising inflation, particularly food inflation, is a reality,” Manish Tiwary, chairman and managing director of Nestlé India, said in the company's Q2 FY27 earnings commentary on Thursday.

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The company said cocoa remained volatile due to weather-driven crop concerns in key producing regions. Sugar and edible oil prices have stabilised at elevated levels, while milk prices have strengthened seasonally, though they are expected to ease as flush supplies arrive.

Coffee and wheat prices are expected to remain range-bound, according to the company.

Nestlé India said it would navigate the challenging cost environment through continued product innovation and renovation, sustained investments behind brands, and a sharper focus on productivity and operational efficiencies.

The inflation warning comes alongside strong quarterly performance. Nestlé India's total sales rose 20.5% year-on-year to Rs 6,782.2 crore in the September quarter, supported by robust double-digit volume growth across product groups. Profit after tax increased 36.3% to Rs 1,026.8 crore, while EBITDA margin stood at 23.8%.

The company also increased advertising and marketing expenditure by 46% during the quarter as it stepped up investments behind its brands.

Nestlé India's commentary highlights the challenge facing packaged food makers: sustaining volume growth and brand investment while managing elevated costs of key agricultural and food commodities. Cocoa volatility is particularly relevant for its confectionery portfolio, which includes KitKat, Munch and Milkybar.

The company said its confectionery business delivered another quarter of volume-led double-digit growth, with KitKat continuing to gain market share and momentum sustained across Munch and Milkybar.

Meanwhile, general trade recorded double-digit growth across town classes, led by rural markets, while e-commerce growth was driven by continued momentum in quick commerce.

Nestlé India said it would continue to focus on efficiencies across its operations to mitigate commodity cost pressures.