■ Nestle’s maintains its position as the fastest growing Indian FMCG companies:
o Nestlé’s domestic sales growth at 10.5% is by far the highest among Indian FMCG companies for this quarter.
■ Domestic growth driven by noodles and chocolates:
o Maggi noodles was a key driver for growth as the brand is still making a full comeback after the ban in 2015. The market share which was over 80% before the ban, is far from that level at ~60% after three years of a comeback.
o The other category which is leading the growth is chocolates where Nestlé’s market share is coming back after having halved in the last 10 years from ~28% to ~14%. This is driven by product innovations like Kit Kat deserts and Munch Nuts, and a drive to expand distribution especially in smaller cities and rural areas.
■ Milo launched during the quarter:
o Nestle launched Milo malted beverage into India during the quarter.
o This is one category where Nestle is the market leader in many markets outside India, but had exited the India business in 2008.
■ Input cost pressures impact gross margins, however we do not see this as a major concern:
o Nestlé’s gross margin declined 210bps YoY in 3QCY19 as there was high double digit inflation in milk and milk derivatives, which was not fully passed on to consumers.
o The other factor will be that the winter crop in India is likely to be good due to the very heavy monsoons this year. This could lead to improved production of one of Nestle's key inputs wheat flour which can drive down prices in 2HCY20.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
Found this insight useful?
Please share with your friends and family as well. You can also subscribe to one of our channels listed at the bottom of this page.