Or­ganic Growth Re­ported at 5.6% in Emerg­ing Mar­kets

The Economic Times - - Econ­omy & Com­pa­nies -

Nes­tle fol­lows a Jan­uary-De­cem­ber fi­nan­cial year.

The strong­est per­for­mances were in Europe and South East Asia, be­sides Africa, he said. Or­ganic growth for the Asia, Africa, Ocea­nia (AOA) zone, which Nes­tle de­clares as a com­bined en­tity in earn­ings, was 2.1% com­pared with 0.5% in the pre­ced­ing quar­ter.

As re­ported by ET last month, Maggi has re­gained mar­ket share to re­turn to its lead­er­ship po­si­tion in the noo­dles seg­ment, though this is sig­nif­i­cantly lower than what it was be­fore it was banned last June.

The Vevey, Switzer­land-head­quar­tered firm re­ported a three-month or­ganic growth of 3.9%. While or­ganic growth was 2.5% in de­vel­oped mar­kets, it stood at 5.6% in emerg­ing mar­kets.

In its 2015 an­nual earn­ings, Nes­tle had said that growth of the AOA mar­ket was at 0.5%, negated by the Maggi noo­dles is­sue in In­dia.

The Food Safety & Stan­dards Author­ity of In­dia, the coun­try’s reg­u­la­tor, had banned Maggi fol­low­ing al­le­ga­tions that the pop­u­lar snack con­tained lead in ex­cess of per­mis­si­ble lev­els and that there was mis­la­bel­ing re­lated to flavour en­hancer monosodium glu­ta­mate (MSG).

The ban re­sulted in the In­dia arm of the Swiss foods maker re­port­ing a 17.2% de­cline in net sales for the year ended De­cem­ber 2015, while net profit fell to .₹ 563 crore, from .₹ 1,185 crore in the pre­vi­ous year. The ban forced Nes­tle to take a hit of .₹ 450 crore as it de­stroyed more than 30,000 tonnes of Maggi noo­dles and the firm re­ported its first loss in three decades in the April-June quar­ter of 2015.

Nes­tle In­dia chair­man Suresh Narayanan told ET last month that the Maggi noo­dles brand had re­gained the top slot in mar­ket share at over 48%, cit­ing mar­ket re­searcher Nielsen. How­ever, the cat­e­gory is now es­ti­mated at a lit­tle over .₹ 2,000 crore, down from .₹ 3,000 crore be­fore the ban.

Fol­low­ing mul­ti­ple clear­ances, first by the Bom­bay High Court and gov­ern­ment labs, Nes­tle re­sumed sales of Maggi noo­dles in Novem­ber. “Maggi used to con­trib­ute close to 30% of our port­fo­lio be­fore the con­tro­versy. At the mo­ment, it’s slightly less than a fourth of the turnover be­cause the full trac­tion hasn’t hap­pened. But it’s quickly catch­ing up,” Narayanan had said.

The ban forced Nes­tle to take a hit of 450 cr as it de­stroyed more than 30k tonnes of Maggi noo­dles

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