Dr. Swati A. Piramal Non-Exective and Independent Director, Nestle India Ltd.
T he country’s biggest foods company Nestle India is revamping coffee brand Nescafe with new packaging and a fresh ad theme — ‘It all starts with a Nescafe’. The revamp is in line with the firm’s global mandate to rejuvenate the brand and make it more contemporary. “All Nescafe packs will transition into the global aligned visual identity system,” said Nayla Sioufi, general manager, coffee. “This change will also be accompanied by the new common communication messaging centred around ‘It all starts with a Nescafe’.” Sioufi added that the change is aimed at “further strengthening the brand’s market leadership in the instant coffee category in India.” She, however, didn’t divulge the brand’s current market share. Prasoon Joshi, executive chairman, McCann World Group, the creative agency on the Nescafe account, declined to comment on its advertising plans in India. Joshi is currently at the Cannes Lions festival, where he’s a judge. But a top official at the agency said, “Nestle is yet to decide how the new advertising will pan out... It’s work in progress.” The current ads show Bollywood actress Deepika Padukone as the face of Nescafe, along with musicians Shankar Mahadevan, Ehsaan Noorani and Loy Mendonsa, apart from TV actor Purab Kohli. A recent industry report said that in the instant coffee category, Nescafe is the leader with about threefourths share, with Hundustan Unilever’s Bru at second slot. The packaged coffee market is estimated at close to Rs 800 crore, but growing in low single digits at best, with almost no category innovation by marketers. Meanwhile, the cafe culture seems to be catching on at the expense of home consumption. Prathish Nair, chief business architect at consulting firm Trancend Brand Consulting, said, “Imagery of coffee almost always projects togetherness — so people prefer to consume it outside. So coffee tends to become more an ‘outside consumption’,” Nair said. “Packaged coffee has to put in significant effort to rejuvenate the coffee ... for example, the single-shot coffee which is a big hit in international markets hasn’t been attempted here,” Nair added. The Vevey, Switzerland headquartered company announced two days ago that Nescafe was launching a unified, global look and feel across all products in the 180 countries where it is sold.
Nestle India Q1 profit declines 7% to Rs 259 crore
FMCG major Nestle India today posted a 7.14 percent decline in net profit to Rs 259.16 crore in the first quarter ended March 31. The company had posted a profit of Rs 279.09 crore in the January-March quarter a year earlier. Net sales rose to Rs 2,313.46 crore from Rs 2,248.08 crore in the same period of the previous year, Nestle India said in a BSE filing. “The first-quarter results are broadly as expected and in line with our strategy, which was alluded to in my comments while announcing the full year 2013 results,” Nestle India Managing Director Etienne Benet said. He said Nestle would continue to take decisions to move towards being a leader of nutrition, health and wellness in India. Nestle said its board declared an interim dividend of Rs 12.50 per equity share for 2014. Nestle India shares rose 0.56 percent to Rs 4,851.35 at the close on the BSE.
Motilal Oswal neutral on Nestle India, Zee Entertainment
Motilal Oswal’s research report Nestle India “NEST’s strategy of aligning resources behind its high margin portfolio is a long term positive but impacts near-term volumes. Despite a weak base, we do not expect material improvement in volume growth (channel checks suggest continued weakness). RM inflation is a key risk to earnings. Rich valuations (34.5x CY14E and 29.7x CY15E EPS) do not provide any margin of safety. Maintain Neutral with a target price of Rs 5065. Reversal of urban sentiment, pick-up in the pace of innovation/new launches are key upside risks to our recommendation.” Zee Entertainment Enterprises “Zee announced discontinuation of MediaPro, its distribution JV with Star, on account of TRAI’s February 2014 regulation. Zee would be setting up independent affiliate sales team for its channels. With its strong channel bouquet, we do not expect any major challenges on the distribution front. However, its negotiating power with MSOs/ICOs/DTH operators will get impacted post this transition. MediaPro enjoyed significant advantage given its dominant market share and played a significant role in the robust 24% domestic subscription growth for Zee during FY1114E. We are keeping our estimates unchanged given lack of clarity on potential monetization impact post the transition. The stock trades at a P/E of 23.5x FY15E and 18.4x FY16E. Maintain Neutral with a target price of INR300 based on 20x FY16 EPS”, says Motilal Oswal research report. Disclaimer: The views and investment tips expressed by investment experts/ broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.