Nestle India has a reason to cheer. Its trusted two-minute Maggi noodles has brought back the customers and put money in the coffers, with net sales in the June-ended quarter rising to Rs 2,256.0 crore compared to Rs 1,933.8 crore seen in the same period last year, up 16.7%.
In the domestic market alone, where a ban was imposed on Maggi noodles for containing more than permissible levels of lead and Monosodium Glutamate (MSG) last year, sales in the April – June 2016 quarter rose to Rs 2,087.2 crore from the Rs 1,776.0 crore posted in the same period last year, an improvement of 17.5%. The ban was subsequently lifted in November 2015.
The company posted a net profit of Rs 231 crore, up significantly from the Rs 66.4 crore loss in the corresponding period last year.
While announcing the results, the management said, “Maggi has regained the market leadership in noodles segment with share of 57% after its reintroduction in November last year. Nestle is still far from the peak market share of approximately 80% in instant noodles it used to enjoy before the crisis, a report by Reliance Securities noted.
Chairman and Managing Director of Nestle India, Suresh Narayanan, who was given the role when the Maggi crisis was underway in 2015, thanked Maggi’s customers for bringing the brand back.
“It is heartening to see Maggi Noodles rebound to market leadership of about 57% after its reintroduction last November. The Maggi brand has indeed shown resilience and consumer trust in its comeback. I want to thank millions of consumers, well-wishers and thousands of partners for helping us get back strongly.
While the numbers are indicative of a good quarter for Nestle India, the Reliance Securities report said that they had an advantage of a favourable base impact due to the ban and withdrawal of Maggi in the second quarter of 2015.
Considering Maggi’s market size and current market share, its quarterly turnover in April-June should be about Rs 370 crore, it said.
But apart from the beloved Maggi noodles, Nestle has a wide portfolio in India which includes EveryDay milk products, Nescafe coffee brands, chocolates like Kitkat, Milkybar, BarOne, Munch, and much more.
Considering that on an absolute basis, Nestle India’s sales in the domestic market increased by Rs 310 crore to Rs 2,090 crore, the other segments haven’t seen much growth in the last year.
“This suggests that the portfolio ex-Maggi has not seen any uptick in revenue growth and challenges persist in those segments,” the report said.
In the quarter under consideration, Nestle India also launched 25 new products to ‘harness growth opportunities across all categories,” the report said.
“These launches and more to follow in due course of time, will contribute to the future growth of Nestlé India,” Narayanan said.