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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key developments in the Indian consumer space over the past month:
• Beverages: competition hots up. Ahead of the summer season, food
companies are trying to woo consumers with various fruit based beverages.
HUL has introduced Kissan fruit & soya drinks and Coca-Cola India has
extended its Minute Maid brand to fruit juices now. Dabur recently relaunched
their leading brand Real with new packaging and more variants. Pepsico India
has introduced a promotional offer for their lemon based drink Nimbooz at Rs5.
• Price cuts in shampoos. Channel checks indicate that P&G is offering Pantene
sachets at Re 1 (vs Rs 1.5 earlier). Also, they are initiating c15% promotional
discounts for Pantene and Head & Shoulders. This, we believe, would hurt near
term profitability for shampoos category and be negative for HUL and Dabur.
• Price hikes. 1) HUL raised prices across its laundry segment (Surf, Rin, Wheel)
by 2-10% in wake of stiff input cost enviornment. P&G had earlier discontinued
the promotional – 10% extra offer – on its leading detergent brand Tide Plus, 2)
Marico took more price hikes in Feb’11 amounting to 3-8% across various
SKUs of Saffola edible oil. Marico has cumulatively hiked prices across Saffola
SKU’s by 15-20% since Sep’10, 3) Emami has undertaken 7% effective price
hike for its Re1 SKU for Navratna cooling oil by reducing the grammage.
• Other new product launches. 1) Cadbury India (subsidiary of Kraft Foods)
foraed in biscuits segment through launch of Oreo brand, 2) L’Oreal expands
its skin care portfolio with the launch of Garnier Light Ultra fairness cream.
• JPM Global Research. Nestle S.A (covered by Polly Barclay). CAGE
Conference takeaways: While Nestlé is long-term in its thinking, it is focused on
delivering in the short term. In 2011 its performance will be 2H-weighted, with
the rise in food commodity prices putting pressure on 1H margins. It will protect
its margins through cost savings, innovation and price increases. It is
increasingly investing in the emerging markets which will account for 50% of
capex this year.
• Key commodity trends. Over the past month, vegetable oil prices witnessed
correction: Palm oil (-6% m/m), soybean (-3% m/m). While wheat prices (-9%
m/m) declined, sugar was relatively stable. LAB prices rose 7% m/m.
• Performance and Valuation. Over the past month, BSE FMCG Index was up
2.4%, underperforming Sensex by 2.9%. ITC and GSK Consumer were better
performer, up 9% and 7% respectively.
Domestic Market – What’s changing?
Beverages: Food companies stepping up investments
Ahead of the summer season, various food and beverage companies are trying to
woo consumers with various fruit based beverages. HUL has introduced Kissan fruit
& soya drinks and Coca-Cola India has extended its Minute Maid brand to fruit
juices now. Dabur recently relaunched their leading brand Real with new packaging
and more variants. Pepsico India has introduced a promotional offer for their lemon
based drink Nimbooz at Rs5.
Companies are leveraging on rising demand for healthy food products. Rising
awareness and income levels and fast paced lifestyles are spurring the need for health
snacks. These products command higher pricing and benefit gross margin profile for
the manufacturers too.
P&G offers discounts on shampoo brands
Contrary to price increases being witnessed in most of the FMCG categories, the
shampoos segment appears to be headed towards a pricing war for near term.
Channel checks indicate that P&G is offering Pantene sachets at Re 1 (vs Rs 1.5
earlier). Also, they are initiating c15% promotional discounts for Pantene and Head
& Shoulders. This, we think, would hurt near term profitability for shampoos
category and would be negative for HUL and Dabur. For HUL, we estimate
shampoos acount for c8-9% of sales and 10-12% of profits. Taking a cue from the
past (as seen in 1H10), HUL could reciprocate with similar offers for its Clinic Plus
brand.
HUL takes price hikes across laundry portfolio
HUL has raised prices by 2-10% across its laundry portfolio (Rin, Wheel and Surf
Excel). This comes on the back of P&G discontinuing the promotional – 10% extra
offer – on its key detergent brand Tide Plus. Earlier this year, HUL had undertaken
price increases across its soap and skin care brands. This move is in wake of
mounting input cost pressures.
Marico raises prices for Saffola vegetable oil by 3-8%
Marico took more price hikes in Feb’11 amounting to 3-8% across various SKUs of
Saffola edible oil. Marico has cumulatively hiked prices across Saffola SKU’s by 15-
20% since Sep’10.
Also Marico has undertaken cumulatively 20-40% price increase across Parachute
SKU’s in wake of sharp c40% rise in copra prices since Sep’10.
Cadbury India launches Oreo biscuits
Cadbury India (subsidiary of Kraft Foods) announced its foray in biscuits segment
through the launch of Oreo brand from the global portfolio of its parent. It is looking
to manufacture the products locally and introduce it at affordable and popular price
points of Rs5, 10 and 20. They will use Cadbury’s wide distribution network to
market and sell the product in order to garner higher share of fast growing premium
biscuit market.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Key developments in the Indian consumer space over the past month:
• Beverages: competition hots up. Ahead of the summer season, food
companies are trying to woo consumers with various fruit based beverages.
HUL has introduced Kissan fruit & soya drinks and Coca-Cola India has
extended its Minute Maid brand to fruit juices now. Dabur recently relaunched
their leading brand Real with new packaging and more variants. Pepsico India
has introduced a promotional offer for their lemon based drink Nimbooz at Rs5.
• Price cuts in shampoos. Channel checks indicate that P&G is offering Pantene
sachets at Re 1 (vs Rs 1.5 earlier). Also, they are initiating c15% promotional
discounts for Pantene and Head & Shoulders. This, we believe, would hurt near
term profitability for shampoos category and be negative for HUL and Dabur.
• Price hikes. 1) HUL raised prices across its laundry segment (Surf, Rin, Wheel)
by 2-10% in wake of stiff input cost enviornment. P&G had earlier discontinued
the promotional – 10% extra offer – on its leading detergent brand Tide Plus, 2)
Marico took more price hikes in Feb’11 amounting to 3-8% across various
SKUs of Saffola edible oil. Marico has cumulatively hiked prices across Saffola
SKU’s by 15-20% since Sep’10, 3) Emami has undertaken 7% effective price
hike for its Re1 SKU for Navratna cooling oil by reducing the grammage.
• Other new product launches. 1) Cadbury India (subsidiary of Kraft Foods)
foraed in biscuits segment through launch of Oreo brand, 2) L’Oreal expands
its skin care portfolio with the launch of Garnier Light Ultra fairness cream.
• JPM Global Research. Nestle S.A (covered by Polly Barclay). CAGE
Conference takeaways: While Nestlé is long-term in its thinking, it is focused on
delivering in the short term. In 2011 its performance will be 2H-weighted, with
the rise in food commodity prices putting pressure on 1H margins. It will protect
its margins through cost savings, innovation and price increases. It is
increasingly investing in the emerging markets which will account for 50% of
capex this year.
• Key commodity trends. Over the past month, vegetable oil prices witnessed
correction: Palm oil (-6% m/m), soybean (-3% m/m). While wheat prices (-9%
m/m) declined, sugar was relatively stable. LAB prices rose 7% m/m.
• Performance and Valuation. Over the past month, BSE FMCG Index was up
2.4%, underperforming Sensex by 2.9%. ITC and GSK Consumer were better
performer, up 9% and 7% respectively.
Domestic Market – What’s changing?
Beverages: Food companies stepping up investments
Ahead of the summer season, various food and beverage companies are trying to
woo consumers with various fruit based beverages. HUL has introduced Kissan fruit
& soya drinks and Coca-Cola India has extended its Minute Maid brand to fruit
juices now. Dabur recently relaunched their leading brand Real with new packaging
and more variants. Pepsico India has introduced a promotional offer for their lemon
based drink Nimbooz at Rs5.
Companies are leveraging on rising demand for healthy food products. Rising
awareness and income levels and fast paced lifestyles are spurring the need for health
snacks. These products command higher pricing and benefit gross margin profile for
the manufacturers too.
P&G offers discounts on shampoo brands
Contrary to price increases being witnessed in most of the FMCG categories, the
shampoos segment appears to be headed towards a pricing war for near term.
Channel checks indicate that P&G is offering Pantene sachets at Re 1 (vs Rs 1.5
earlier). Also, they are initiating c15% promotional discounts for Pantene and Head
& Shoulders. This, we think, would hurt near term profitability for shampoos
category and would be negative for HUL and Dabur. For HUL, we estimate
shampoos acount for c8-9% of sales and 10-12% of profits. Taking a cue from the
past (as seen in 1H10), HUL could reciprocate with similar offers for its Clinic Plus
brand.
HUL takes price hikes across laundry portfolio
HUL has raised prices by 2-10% across its laundry portfolio (Rin, Wheel and Surf
Excel). This comes on the back of P&G discontinuing the promotional – 10% extra
offer – on its key detergent brand Tide Plus. Earlier this year, HUL had undertaken
price increases across its soap and skin care brands. This move is in wake of
mounting input cost pressures.
Marico raises prices for Saffola vegetable oil by 3-8%
Marico took more price hikes in Feb’11 amounting to 3-8% across various SKUs of
Saffola edible oil. Marico has cumulatively hiked prices across Saffola SKU’s by 15-
20% since Sep’10.
Also Marico has undertaken cumulatively 20-40% price increase across Parachute
SKU’s in wake of sharp c40% rise in copra prices since Sep’10.
Cadbury India launches Oreo biscuits
Cadbury India (subsidiary of Kraft Foods) announced its foray in biscuits segment
through the launch of Oreo brand from the global portfolio of its parent. It is looking
to manufacture the products locally and introduce it at affordable and popular price
points of Rs5, 10 and 20. They will use Cadbury’s wide distribution network to
market and sell the product in order to garner higher share of fast growing premium
biscuit market.
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