FMCG firms eye volume growth rebound in FY25 with hopes pinned on lower inflation, favorable monsoon

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May 7, 2024

After experiencing sluggish volume growth over the past two years, FMCG companies are now squarely focused on achieving volume growth recovery for FY25. They’re pinning their hopes on a reduced inflationary environment, favorable monsoon forecasts, and a promising rabi crop to drive higher volume growth. Companies such as Britannia Industries, Nestle India, Dabur India, and Parle Products have stated that they are looking to bolster volume growth this fiscal year.

On Monday, during an investor call, Britannia Industries’ management articulated their aim for “double-digit volume growth in FY25” following the elections and monsoon season, according to an analyst report from Nuvama Institutional Equities.

Mayank Shah, Vice-President of Parle Products, explained, “During FY23, FMCG companies grappled with high-base effects in the post-Covid era, impacting volumes. In FY24, challenges such as unprecedented inflationary pressures, particularly driven by edible oils, and erratic monsoons resulted in sluggish volume growth. To manage this inflation, FMCG companies had to implement multiple price hikes. Now, with a more stable inflationary environment, favorable rabi crop conditions, and positive monsoon forecasts, most major FMCG companies are targeting increased volume growth.”

Continue Exploring: FMCG and dairy giants prepare for summer surge: PepsiCo and Coca-Cola ramp up production as heatwave looms, Dabur and Havmor expand capacity

He noted that companies have been prioritizing price reductions and increasing promotional efforts in an attempt to boost volumes.

“Numerous major FMCG companies, including ours, which experienced low single-digit volume growth in FY24, are targeting an average volume growth in the range of 9-12 percent,” Shah added.

Last week, Suresh Narayanan, CMD of Nestle India, stated, “Our company’s strategy has been centered around penetration. Therefore, my primary aim is to significantly increase volume growth swiftly, without lingering on value growth.” The leading packaged food company achieved a 4-5 percent volume growth in the March quarter. Narayanan mentioned the company’s anticipation of stable commodity prices for items like edible oils and wheat. Although facing considerable inflationary pressures concerning cocoa and coffee, the company is endeavoring to minimize the necessity for price hikes.

During an earnings call on Friday, Dabur India CEO Mohit Malhotra stated, “Strong volume growth is essential for our growth trajectory. We are targeting a mid to high single-digit volume growth. We anticipate that our growth for this fiscal year will primarily be driven by volume expansion.”

Continue Exploring: Good monsoon, improved macro indicators to drive consumer demand for FMCG products

Wildcraft eyes growth with INR 80 Crore investment in new warehouse facility

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May 7, 2024

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Wildcraft, an indigenous brand specializing in adventure and outdoor products, has allocated INR 80 crore to establish a warehouse in Sira, Karnataka, spanning over 3.5 lakh square feet, according to Gaurav Dublish, Co-Founder of Wildcraft.

In the coming 18-36 months, the brand aims to invest an additional INR 40 crore to enhance its production capacity adjacent to this warehouse facility.

“The funding for the greenfield warehouse came from internal accruals and available debt lines. By July, we plan to merge our four current warehouses, each spanning 1.5 to 2 lakh square feet, into the new facility, which boasts an area of 3 to 3.5 lakh square feet,” he stated.

“After achieving stability, we will initiate the second phase of the project. Once established, the project is expected to create job opportunities for approximately 5,000 individuals. This will also position us favorably for the next 5-10 years,” he elaborated.

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Currently, the brand’s production capacity is 5 million units, and it is operating at maximum capacity.

“We foresee the demand increasing to 10 million units within the next 2-3 years,” he clarified.

The brand features its own R&D lab and production unit, established in 2008. At present, 75 percent of its offerings are manufactured at its production facility, with 20 percent sourced domestically and the remaining 5 percent imported.

At present, the brand has a product lineup of 1,300 items spanning three categories: clothing, footwear, and accessories.

“Currently, accessories account for 50-60 percent of the revenue, followed by clothing at 30 percent, with footwear making up the remainder,” he stated.

“Up until 2018, 70-75 percent of our revenue came from accessories,” he added.

With its current network of 220 stores, the brand aims to inaugurate an additional 50 stores this fiscal year.

“Currently, we manage 160 company-owned, company-operated stores alongside 60 franchise stores. In the previous fiscal year, we launched 40 new stores. This fiscal, we intend to allocate INR 25 crore to bolster our offline retail footprint,” he elaborated.

“Of the 50 stores slated for opening this fiscal year, we will directly operate 35, while the remaining 15 will be managed by franchise partners,” he further explained.

The brand aims to achieve a total of 350 stores by the year 2026.

Currently, one-third of the brand’s stores are located in malls, while the remaining two-thirds are situated on high streets.

Continue Exploring: D2C luggage brand Mokobara secures $12 million in funding from Peak XV Partners, existing investors

“Our exclusive retail channels generate 25 percent of the brand’s revenue, online purchases account for 20 percent, and distribution channels contribute the remaining 50 percent,” he noted.

The brand is present in 7,500 retail outlets across 600 cities and is supported by a network of 140 distributors.

When questioned about the brand’s revenue growth, he responded, “As a privately held company, we do not disclose specific revenue figures. Nevertheless, over the past 10-11 years, the brand has maintained a growth rate of 25 percent CAGR with positive EBITDA.”

BAT to stay off ITC Hotels’ board amid demerger plans

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May 7, 2024

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ITC‘s soon-to-be-demerged hotel business will not include any board representation from its largest shareholder, BAT, as indicated in the company’s demerger document sent to shareholders. According to insights from an industry executive, this absence signals BAT’s potential disinterest in the hotel sector, possibly leading to the sale of its stake in ITC Hotels after the company’s anticipated listing in the next 4-6 months.

The document released on Friday reveals that BAT will hold a direct ownership stake of 15.32% in ITC Hotels through foreign direct investment, positioning it as the largest public shareholder after ITC’s promoter holding of 39.93%.

Tadeu Marroco, the CEO of BAT, said in December that ITC’s hotel sector is not of interest to the British tobacco company. Despite this, the document showed that BAT voted in favour of the demerger. Even after selling its whole investment, BAT will retain an indirect interest in the company through ITC’s ownership of the hotel company.

ITC’s board currently includes two representatives from BAT, namely Sunil Panray and Atul Singh. In March, BAT executed a block deal selling a 3.5% stake in ITC to institutional investors for INR 16,690 crore, reducing its holding to 25.51%.

Continue Exploring: ITC board approves hotel business demerger, expects ROCE to improve significantly

According to the document, the proposed board will feature ITC chairman Sanjiv Puri, who will assume the role of chairman and non-executive director within the new entity. Additionally, three other senior executives from ITC will join as non-executive directors: Anil Chadha, the chief executive of the hospitality business; Supratim Dutta, the executive director and chief financial officer; and RK Singhi, the company secretary. PR Ramesh, a former partner at Deloitte Haskins & Sells LLP, will also join as a non-executive director. The mentioned executive suggested that the board of ITC Hotels might expand post-listing. Furthermore, Puri is expected to retain his position as chairman, and Chadha could potentially be appointed as the managing director of the new company.

He mentioned that this decision will be made by the board of ITC Hotels following the listing. Nevertheless, he expressed doubt that BAT would assume a board position at that time as well.

Following the listing, BAT is expected to engage a merchant banker to facilitate the sale of its stake in ITC Hotels.

Continue Exploring: BAT set to divest up to 3.5% stake in ITC through block trade transaction

An analyst remarked that BAT’s departure from ITC Hotels is inevitable. “There are no significant hurdles for BAT to divest its stake in ITC Hotels, given that regulations in the hotel sector are not as stringent as those in tobacco,” the analyst explained. Responding to inquiries, a spokesperson for ITC mentioned that a meeting of the company’s ordinary shareholders has been scheduled for June 6 to approve the scheme of arrangements regarding the demerger of the hotel business.

FMCG giant Godrej Consumer Products reports INR 1,893 Crore net loss in Q4

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May 7, 2024

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Godrej Consumer Products (GCPL) recorded a consolidated net loss of INR 1,893 crore for the quarter ended March 31, 2024, compared to a net profit of INR 452.14 crore in the year-ago period.

The company additionally announced an interim dividend of INR 10 per share for the fiscal year 2024-25. The record date to determine eligible shareholders for the dividend is Tuesday, May 14, 2024. The dividend is scheduled to be disbursed on or before Wednesday, June 5, 2024.

The company’s revenue from operations for the reported quarter reached INR 3,365.11 crore, marking a 6% increase over the INR 3,172.21 crore recorded in the same period last year.

During the preceding quarter, the company registered a profit after tax (PAT) of INR 581.06 crore, with revenue from sales of goods totaling INR 3,172.21 crore.

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The total revenue from operations, including revenue from sales of products and other operating revenue, amounted to INR 3,385.61 crore. Of this, INR 2,033.59 crore was attributed to the Indian segment, while the contributions from Indonesia and Africa were INR 498.34 crore and INR 593.69 crore, respectively. The remaining revenue stood at INR 290.03 crore.

The loss in the January-March quarter was primarily due to exceptional items, with the company facing losses amounting to INR 2,375.65 crore. According to its filing with the exchanges, during the fiscal year that ended on March 31, 2024, the company encountered exceptional items, including a loss of INR 792.6 crore from the sale of investment in Godrej East Africa Holdings Limited, and an impairment provision of INR 273.9 crore related to the devaluation of investment in Godrej Mauritius Africa Holdings Limited, prompted by shifts in business model and a long-term strategy revamp for Africa.

The exceptional items also encompassed stamp duty payment and other costs associated with the acquisition of Raymond Consumer Care Business, totaling INR 87.8 crore, along with INR 0.8 crore designated for other restructuring expenses in the standalone financial results.

In the fourth quarter of fiscal year 2024, consolidated volume saw a 12% increase, driven by a 15% growth in the India business volume and a 12% growth in Indonesia volume. Additionally, consolidated EBITDA witnessed an 18% year-on-year growth in the same period.

The home care category experienced a 6% growth, while personal care saw a 4% increase, driven by growth in volume.

The earnings were disclosed after the market closed, with the share closing at INR 1,228.85 on the NSE, marking a decrease of INR 22.35 or 1.79% from the Friday closing price.

Continue Exploring: Godrej Consumer Products reports 6% YoY rise in Q3 consolidated net profit to INR 581 Crore

Clothing brand Being Human marks milestone with 100th store opening in Jaipur

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May 6, 2024

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The renowned clothing brand, Being Human, has just unveiled its 100th store in the lively Pink City of Jaipur, Rajasthan. This milestone in the brand’s history was celebrated with the presence of notable personalities including Sohail Khan, Alvira Khan Agnihotri (Managing Director of Being Human Clothing), Beena Kak, Awez Darbar, Sanjeev Rao (CEO of Being Human Clothing), Vivek Sandhwar (COO of Being Human Clothing), and the brand’s leadership team.

Situated in Jaipur’s prime shopping district, the flagship store spans over 2100 square feet, offering easy accessibility and housing an impressive collection of Being Human clothing and accessories.

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“It’s really heartwarming how welcoming the locals have been. Their support and passion attest to Jaipur’s suitability as a home for Being Human. Bollywood actor Sohail Khan said, “As we begin this project in Jaipur, it’s not just about opening a store; it’s about reaching out with friendship and solidarity to the wonderful people of this city.”

“We’re excited at Being Human to bring our iconic brand within reach of the Jaipur community. The inauguration of our 100th store in this historic city highlights our dedication to broadening our presence throughout India, providing our discerning customers with access to our latest collections in an enchanting retail setting,” said Sanjeev Rao, CEO of Being Human.

With the inauguration of its flagship store in Jaipur, Being Human further extends its footprint across India. The company is set to unveil several more stores across Rajasthan in the coming months.

Continue Exploring: Tata Group eyes expansion with potential stake purchase in Fabindia’s apparel business

Krispy Kreme to bring iconic doughnuts to Germany through partnership with ISH Kreme

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May 6, 2024

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Krispy Kreme Inc. has entered into an agreement with restaurant group ISH Kreme to introduce the beloved sweet treats to Germany.

Krispy Kreme plans to make its iconic, freshly baked doughnuts available to German consumers via a network of Krispy Kreme shops, beginning in Berlin.

“We’re thrilled about our expansion into Germany, a priority market for us, offering significant growth potential with over 3,000 points of access,” stated Raphael Duvivier, Chief Development Officer of Krispy Kreme. “Furthermore, we’re delighted to collaborate with ISH leader Ilkem Sahin and the highly experienced ISH team to drive our growth in this market,” he added.

Krispy Kreme’s versatile fresh business model, powered by a capital-efficient hub-and-spoke system, facilitates extensive growth both in the US and international markets. Every Krispy Kreme doughnut is freshly made daily, meticulously hand-crafted, and hand-decorated, ensuring the signature melt-in-your-mouth flavor that epitomizes the brand.

This announcement follows the December 2023 launch of Krispy Kreme in Paris. The company is set to commence operations in Germany in early 2025. ISH oversees the management of 300 KFC and Pizza Hut outlets throughout Germany.

Krispy Kreme operates in over 35 countries, utilizing its distinctive network of fresh doughnut shops, collaborations with top retailers, and a swiftly expanding e-commerce and delivery segment, boasting over 14,000 fresh access points.

Heineken injects £39 Million to revive 62 UK pubs

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May 6, 2024

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Heineken, the brewing giant, is injecting £39 million into its UK pub network, aiming to revitalize 62 once-shuttered venues.

This endeavor, a facet of Heineken’s Star Pubs and Bars division overseeing 2,400 sites throughout the UK, anticipates creating over 1,000 fresh employment opportunities.

The funding will enable refurbishments at over 600 pubs nationwide, accounting for roughly a quarter of the Star chain, and will target 94 additional outlets, predominantly in suburban locales, within the current year.

The investment is geared towards adjusting to the evolving work patterns, as more individuals opt for remote work and outdoor spaces gain heightened popularity in the aftermath of the pandemic.

Continue Exploring: India’s diverse market landscape demands tailored state-wise focus, says Heineken CFO

The world’s second-largest brewer plans to enlarge kitchen facilities and improve pub gardens as part of its expansion efforts.

The company’s strategy aims to return the number of operational outlets to pre-pandemic levels, mirroring the shift in customer commuting habits towards city centers.

Heineken’s renovation plans will convert specific pubs into high-quality local establishments.

The renovations will incorporate “subtle zoning” to cater to various customer activities, including sports viewing and dining.

Lawson Mountstevens, the managing director of Star Pubs, remarked, “Customers seek maximum value from their local outings.”

“They desire excellent ambiance, food, and beverages, along with activities that provide added incentive for outings, like sports screenings and entertainment,” noted Lawson Mountstevens.

This recent investment is part of a larger £200 million commitment by Heineken to its UK pubs since 2019.

In a recent development, Punch Pubs, a UK-based pub and bar operator, broadened its portfolio by acquiring 24 Wear Inns pubs from Milton Three. These include establishments like the Black Bull in Morpeth, the Cross Keys in Washington, and the New Inn in Wetherby.

Continue Exploring: Heineken surpasses Q1 beer sales targets, maintains 2024 outlook

Maya Pistola Agavepura launches Añejo and Extra Añejo spirits in Mumbai

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May 6, 2024

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Maya Pistola Agavepura, a pioneering name in Asia’s realm of premium, aged 100% Agave spirit, has unveiled its much-awaited Añejo and Extra Añejo variants in Mumbai.

With meticulous precision and fervent dedication, Maya Pistola Agavepura’s Añejo and Extra Añejo variants epitomize the brand’s dedication to excellence and genuine craftsmanship. Every iteration undergoes meticulous aging, resulting in luxurious flavors and intricate nuances that connoisseurs will truly savor.

The Añejo (An-ye-ho), translating to ‘vintage’ in Spanish, stands as a revered embodiment. This distinguished offering captivates with its velvety and intricately layered persona. Exhibiting a rich golden-brown tint, Maya Pistola Añejo boasts an aroma reminiscent of oak, cocoa, and dried figs, gently underscored by a hint of smokiness.

Continue Exploring: Bacardi India intensifies focus on premiumization as demand for high-end spirits surges

The Extra Añejo (Extra An-ye-ho) edition stands as the pinnacle of luxury within the Maya Pistola Agavepura lineup, now gracing the market. Crafted with utmost care, this extraordinary elixir has matured gracefully for more than 36 months. Beginning its journey in Virgin American White Oak barrels to extract the essence of vanilla and caramel, it then undergoes a finishing touch in Ex-Maker’s Mark barrels, imparting a delightful infusion of butterscotch and subtle dry spice notes.

“We are thrilled to introduce our Extra Añejo and Añejo variants to our premium customer base. These releases are the pinnacle of our attention to detail and capture the complexity and depth that can only be achieved using conventional ageing techniques. Director & Founder of Maya Pistola Agavepura Rakshay Dhariwal said, “We’re sure that both seasoned enthusiasts as well as newcomers will recognise and savour the unmatched quality and flavour complexity of these remarkable spirits.”

Maya Pistola Agavepura’s latest premium offerings are now accessible at select retail outlets in Maharashtra, priced at INR 7,850 for the Añejo (700 ml) and Rs 17,500 for the Extra Añejo (700 ml). Additionally, smaller sizes are available for INR 2,495 (180 ml) for the Añejo and INR 4,500 (180 ml) for the Extra Añejo. These variants will also be featured at prominent F&B venues across Mumbai.

“Both the Añejo and Extra Añejo editions embody richness, boldness, and complexity, each with its distinct traits and subtleties. The Añejo evokes the essence of a festive Christmas cake, brimming with the flavors of dried fruits, nuts, and spices, cherished for the joy it brings to momentous occasions. Meanwhile, the Extra Añejo conjures the cozy ambiance of loved ones gathering around a fireplace. These opulent spirits present a captivating alternative for India’s discerning whisky enthusiasts,” remarked Chief Operating Officer Kimberly Pereira.

Continue Exploring: Indigenous spirits shine: India’s liquor exports soar, set to break $1 Billion barrier

Marico’s consolidated PAT surges 5% YoY to INR 320 Crore in Q4 FY24

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May 6, 2024

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Marico, a leading player in the FMCG sector, has reported a 5% year-on-year (YoY) jump in its March quarter consolidated net profit at INR 320 crore. The profit stood at INR 305 crore in the corresponding period of the previous financial year.

Sequentially, there was a 17% decline compared to the INR 386 crore posted by the company in Q3FY24.

The revenue from operations saw a modest increase of 1.7% to INR 2,278 crore from INR 2,240 crore in the corresponding quarter of the previous year.

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On a standalone basis, the profit after tax (PAT) surged by 12% year-on-year (YoY) to INR 229 crore in Q4FY24. However, standalone revenue declined to INR 1,637 crore from INR 1,702 crore reported by the company in Q4FY23.

The company succeeded in reducing its expenses to INR 1,894 crore in Q4FY24 from INR 1,970 crore in Q3FY24 and INR 1,907 crore in Q4FY23. This marked a 4% decrease on a quarter-on-quarter (QoQ) basis and a 0.68% decrease year-on-year (YoY).

The consolidated revenue from domestic operations remained unchanged at INR 1,680 crore, compared to the revenue reported in the year-ago period of INR 1,683 crore. Conversely, international revenue increased to INR 598 crore in the reported quarter, up from INR 557 crore reported in the corresponding period of the previous financial year.

In the full financial year, the net profit surged by 16% year-on-year (YoY) to INR 1,502 crore from INR 1,322 crore in FY23. Conversely, revenue experienced an 11.40% year-on-year (YoY) decline in FY24, totaling INR 9,795 crore.

Marico shares concluded at INR 531.85 on the NSE, marking an increase of INR 14.95 or 2.89%.

Continue Exploring: Marico reports a 16% surge in net profit, reaching INR 386 Crore in Q3 FY24

Lab-grown diamond exports expected to surge by 7-9% in FY25: CareEdge Advisory Report

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May 6, 2024

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Gems & Jewellery — (Representative Image)

The Lab-grown Diamonds (LGDs) are anticipated to see a revival in FY25, with exports expected to grow by 7-9% to reach a value of approximately $1500-1530 million, according to CareEdge Advisory.

LGD exports have experienced a recent decline, with a year-on-year decrease of approximately 16.5% in FY24. Despite an increase in sales volume, decreasing prices have adversely affected exports. However, CareEdge Advisory suggests that the depreciating rupee may provide some support to the industry.

Moving forward, the demand for LGD exports is projected to rebound in FY25, as demand for naturally mined diamonds may continue to be sluggish. This trend is linked to factors such as price competitiveness, environmental sustainability, and increased competition from India compared to other prominent LGD-producing countries.

Colin Shah, managing director of Kama Jewelry, remarked on the report, stating, “LGDs have been capturing attention due to their cost-effectiveness and environmentally friendly characteristics. The demand for LGDs in both domestic and international markets had been steadily increasing until FY23. However, the subdued sentiment in FY24 was influenced by various global economic factors such as ongoing geopolitical tensions and price volatility, resulting in an overall decline in exports. Interestingly, countries like Germany, the UK, Italy, and China experienced an export surge during FY24, possibly due to the G7 ban on Russian-origin diamonds.”

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Shah mentioned, “Although the downward trend has significantly impacted the general appeal for LGDs, there’s promise for demand revival ahead. This optimism is fueled by a decrease in natural diamond prices driven by weakened purchasing power, laying a favorable foundation for LGD demand to thrive.”

India currently produces over three million lab-grown diamonds annually, contributing to 15% of the global production. It holds the position of the second-largest producer globally, after China. Alongside China and India, other key players in lab-grown diamond production include the U.S., Singapore, and Russia. The Indian market for lab-grown diamond jewellery was valued at US$ 264.5 million in 2022, with an anticipated rise to $300 million in 2023. Despite its growth, the lab-grown diamond industry has encountered challenges, notably a surge in supply leading to a substantial decrease in prices.

However, the India-UAE Comprehensive Economic Partnership Agreement (CEPA) is poised to enhance the growth of the lab-grown diamond industry. For instance, Finance Minister Nirmala Sitharaman, in the Budget 2023-24, announced a reduction in basic customs duty on seeds used in LGD manufacturing from 5% to NIL. This strategic move aims to bolster LGD exports from India amidst dwindling natural diamond reserves. Additionally, the depreciating rupee is expected to provide some support to this export-oriented sector.

High-quality lab-grown diamonds with certified authenticity, manufactured using advanced equipment and precise process parameters, will attract more international consumers, thus revitalizing the export business. Similar to Cut and Polished Diamonds (CPD), the recent decline in LGD prices has resulted in a decrease in India’s LGD exports to key destinations. LGD exports experienced a decline of 16.5%, dropping from US$ 1680.22 million in FY23 to US$ 1402.30 million in FY24.

In FY24, the USA, Hong Kong, and UAE collectively dominated India’s lab-grown diamond exports, representing 90% of the total. From FY16 to FY23, LGD exports witnessed a remarkable ~60% Compound Annual Growth Rate (CAGR). However, in the transition from FY23 to FY24, there was a significant decline of 16.5% year-on-year.

While exports to most countries experienced a downturn, notable exceptions include Germany, the UK, Italy, and China, which displayed substantial export growth during FY24. This surge in certain markets could be attributed, at least in part, to the G7 ban on Russian-origin diamonds.

The primary factors contributing to the export decline are linked to the reduced prices of lab-grown diamonds, indicating stable volumes but resulting in diminished export value. The average price per carat for LGD stood at US$198.22 for the first ten months of FY24, whereas natural diamonds commanded a significantly higher price of US$4357 per carat during the same period.

Continue Exploring: Top jewellery retailers hold back on lab-grown diamonds citing low consumer demand

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