While performance at the bottom line level was mixed for these companies
in the period under review, analysts said this could go up as companies
reined in overall expenditure to improve net profit growth.
Nestlé, Britannia, GlaxoSmithKline Consumer and Manpasand Beverages saw double-digit net profit growth between 19% and 65% for the quarter under review. While net profit growth for Heritage Foods declined 19%, Varun Beverages reported a loss and Parag Milk Foods reported a profit after a loss in the year-ago period.
Abneesh Roy, senior vice-president, research (institutional equities), Edelweiss, said the broader trend of growing packaged food and beverage penetration in India remained intact, presenting an opportunity for these companies. Both small and large companies in the sector, therefore, would take advantage of this as consumer sentiment improved.
Last week, Nestlé said it was decentralising its decision-making procedure to have better consumer insights, focused offerings to different sets of people, and to revamp market penetration. The aim was to double turnover in the next two to three years from Rs 100 billion now. For this, the company has been setting up 15 virtual teams for different clusters, launching local variants of its established brands and coming out with targeted communication and regional distribution strategies, according to Suresh Narayanan, chairman and managing director, Nestlé India.
The move, said Roy, came as Nestlé eyed growth in rural and semi-urban areas, the regions where it has a limited presence. Nestlé is targeting 100 towns in the country.
Britannia is also widening its distribution network through a focus on direct reach, targeting rural areas, and investing in its brands to achieve profitable growth, managing director Varun Berry said. Britannia would introduce 50 products under existing as well as new categories by 2020 from 16 now. These launches would be supported by in-house R&D and marketing as well as manufacturing in new and existing factories, Berry said. The firm would also reduce wastage and improve efficiencies in the supply chain to achieve its target.