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Nestle India eyes double-digit volume growth with new product launches

29-August-2016
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Nestle India eyes double-digit volume growth with new product launches

Recovering from losses after a ban on its Maggi noodles last year, FMCG giant Nestle India reported net profit of Rs 230. 84 crore for the second quarter ended June 30. The company, which follows January-December financial year, had posted a net loss of Rs 64.40 crore in the same quarter last fiscal. The company is reported to aim at double-digit volume growth with driving product penetration, frequency and innovation across categories. 

Sales from the domestic market grew 17.5 per cent and exports increased 7 per cent during the quarter, the company said in its statement. It’s also reported that Nestle India said it has regained leading market share after growth in India turned positive in June after the re-launch of Maggi noodles.

Before being banned by FSSAI (Food Safety and Standards Authority and India) last June due to alleged food safety issues, Maggi owned 80 per cent of the Rs 4,000-crore instant noodles market and contributed around 30 per cent to Nestle’s Rs 9,800 crore domestic revenue. But after its reintroduction in November, it has only managed to capture 57 per cent share of the instant noodles market (which is now worth Rs 2000 crore this June, riding on its marketing initiatives and new variants. Currently the market sees increased competition from from brands such as ITC's Yippee, Patanjali, Nissin's Top Ramen, GC Corp's Wai Wai and Hindustan Unilever's Knorr.

It has mentioned that financially it could take a few more quarters to fully overcome the Rs 500-crore hit caused by the crisis. But Nestle India is upping its game in this category and at the same time working on to reduce its dependency on Maggi.

According to reports, in the six-month period, sales of milk and milk products declined by 1.4% over a year ago, chocolates grew by 1.8% while beverages (mainly coffee) fell by 7.8%. Nestlé India is addressing this decline and fending off competition from competitors like Patanjali by launching 25 products across categories in a short span of three months. This appears to be paying off, indicated from better growth in the second quarter.

According to media reports, Nestle India is focusing on ramping up existing brands, adding new products, entering into new categories, focussing on distribution and targeting a wide range of consumer segment. These new products include seven variants of Maggi noodles, Greek yogurt brand 'Grekyo' and protein growth brand 'Pro-Gro' in dairy segment, besides multiple products in chocolate and confectionery, as also new offerings in coffee and tea.

In Maggi Noodles portfolio especially, consumers were introduced to new variants like 'Maggi Hot Heads' and 'Maggi No Onion No Garlic Masala' and revamped cup noodles like ‘Maggi Cuppa Masala’.  The company further has partnered with online marketplace Snapdeal for their online sale. With this move the firm’s market value has gone up.

Recently Nestle India which enjoys a majority share in baby food and nutrition market in India, forayed into the breakfast cereal category in India with a new brand Ceregrow. For the uninitiated, this market in India is pegged at around Rs 1,300 crore, and has been growing at a CAGR of 22.1 per cent over last five years, according to India Breakfast Cereal Market Overview. This indicates that the company is expanding its reach and targeting new consumers as the FMCG company will be addressing to the cereal-based foods category among children aged between two and five years, a segment that’s untapped in India. This launch is in line with the firm’s strategy to strengthen its presence in the baby nutrition related food category. It’s to be noted that Nestle India gets more than 45 per cent of its sales from milk products and nutrition category, under which the infant formulations are placed.

With these recent launches, the FMCG giant aims to bring in volume growth and improve margins in categories other than that of Maggi brand. 

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