CCL Products


(hiral) #333

Currently Continental brand is only available online atleast in Mumbai. I have not seen it in any of the supermarkets.

I tried Continental Xtra and i would rate it 9/10 for taste and 7/10 for packaging.


#334

You cannot post fake reviews without getting caught, unless you have very good posting styles which are in complete contrast to one another in vocabulary, tone, and the overall expression. I am sure you might have seen some of these. You can always sense fake reviews, they don’t portray any real feelings, they kind of sound desperate, real feelings like praise or anger in words are hard to fake.

I did not read these reviews, just saying.


(SteveBayerIN) #335

At P/E 24, the price is too high for me to buy shares but I’m interested in trying out their Continental brand of coffee. I may enter if the price dips close to P/E 16 and they have a better dividend yield.


(MHS) #336

@rvetri please taste and decide yourself.
I am coffee lover, work overseas in middle east and try time to time different coffee brands.
I tried continental during vacation to India. There is absolutely no doubt, coffee taste is second to none in fact better than Nescafé and Bru.

To say simply Continental taste is top class and if they market it wisely it will become brand.


(rvetri) #337

It could be true that ccl coffee is the best… My only point is 164 review count is too small a sample for a food product used daily … A few thousand reviews at least can be a decent number…


(Saji John) #338

Management speaks to BTVI…Volume increase in 2018…95% exports… https://twitter.com/BTVI/status/1081047301966127104


(Dhinakaran AK) #339

Yes, you are right. I have shifted from Nestle to Continental since about two years now. I vouch for its quality and taste. It’s available in all the Reliance Fresh out lets in Chennai.


#340


As per the info here, current coffee market, instant and roasted combined , in india is $423 mn . It is expected to grow at 7.7% cagr to reach $569mn, roughly about Rs. 4500 cr by 2023.

Now coming to ccl, no doubt that their product is top notch. However, given the competition they are up against, it would be a huge achievement for them if they gain 30% market share i.e domestic sales of Rs.1500 cr by 2023.

I did some back of the envelope calculation with this. Current net margin for their b2b business is 13%. Since margins will be much higher in the b2c business, assuming the margins to be 25-26%, the best case profit from domestic business could be 390cr in 5 yrs. Assuming their b2b business grows at 10% in this period, net profit can reach 650 cr by 2023, best case.

I feel the opportunity size is limited beyond this.
As per another study here

per capital coffee consumption in India has remained stagnant for the last 4 yrs and I don’t see any reason for it to change in near future.

Disclosure- small tracking position


(rupaniamit) #341

CCL Q3FY19 results:

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(Vivek Mashrani, CFA) #342

CCL conference call summary:

Please ignore any typos and request to verify this with actual transcript just in case I have missed anything or mis-understood. Have ignored few business model related points which are already discussed in previous calls.

  • Vietnam entity is now debt free. Guidance for the year remains the same

  • SEZ plant installation is completed, trial ongoing; On track to commence on 1 April

  • Confident of 50% capacity utilization from new plant in 1st year

  • Vietnam: 80% capacity utilization; Plan for capex of 3,500 tonnes next financial year

  • Difficult to reverse engineer and create exactly same blend, but possible

  • Can import raw materials across the world and efficiently procure; This is one of the competitive advantage

  • Developed market consumption has declined due to population not per person consumption; Hence developing market is promising for further growth

  • Focus remains on volume growth; Same guidance due to new capacity coming up

  • Branded business is very small currently, focussed on Indian market; Will not affect much on private label market share as such; Different blends supplied

  • YoY revenue growth may be flat due to raw material price fluctuation; More important is to see bottomline

  • Continental coffee sales: Branded + Domestic to reach 80 cr this year (55 Cr. done for 9 months); Branded retail: 35 Cr (9M: 23 Cr.) vs. 8 cr last year; Rest is bulk label etc.

  • Non-branded domestic B2B: Private label 10-12% growth; Bulk business 15-20% growth; Main focus on branded business though

  • Deal discussion for D-mart private label is still ongoing

  • Nestle advertisement expense can in a way expand the coffee market; Not associated with Nestle after 1997

  • Very small quantity business for starbucks as such

  • Long term contract for processing based on fixed cost; raw coffee supplied and then processed back; For few other raw material purchased and then supply finished product to them and other customers

  • We also supply to customers/competitors whenever required; have maintained good relationship with them

  • Long term margin guidance on B2C: next 2-3 years margins will be re-invested in brand building; Brand building is challenging task

  • In terms of volume overall 9M figures are flat; slight decline qoq but no structural change; Should be looked on yearly basis

  • New plant in India (aglomeration and packaging), the process will initiate next year; Will fully come up by late FY20 or initial FY21

  • Good initial response for new brands which were launched; although too early to conclude

  • Pre-mix doing selective launch; mainly through e-commerce

  • Small pack is penetration strategy and then build on that for bigger packs

  • Giving INR 5 pack for institutional business supply; Would be low margin but competes with tea prices; Process to change habits

  • Pre-mix is as such high margin business and comes with price point of INR 10

  • Growth drivers distributed across globe; Growing in most of the geography we supply

  • Tax rate on Vietnam will remain 0% this year, even for new plant; There is no sunset clause as yet, no indication as of now that it will change

  • PAT growth over last 3-4 years have increased more than revenue due to substantial drop in raw material prices; Volumes have been growing which is translating to PAT

Disclosure: Invested


#343

Earnings Call Transcript
5054b000-18b0-4590-baff-69b1ffba5769.pdf (1.5 MB)


(Vinith Jain) #344

Flipkart Supermart has started selling Continental coffee.


(bimalb) #345

https://www.bloomberg.com/news/articles/2019-03-01/coffee-s-still-reeling-from-a-glut-but-for-how-much-longer?utm_campaign=socialflow-organic&utm_content=markets&cmpid%3D=socialflow-twitter-markets&utm_medium=social&utm_source=twitter


(EL) #346

If price of raw material (coffee) in this case is likely to increase, is this news adverse or management will find a way to pass on the increase …


(Ankush Agrawal) #347

The company is shielded from any change in coffee prices as they work on cost+fixed margin basis. The management has re-iterated it a no. of times.


(Dinesh Sairam) #348

A couple of stores near to where I live (One of them a Nilgiris) in Chennai, have started stocking Continental products. I mostly found the larger, costlier version (A larger version of this). There were also a couple of Davidoffs and other local brands.

The feedback I got from the shopkeeper wasn’t exactly promising. Most of them replied along the lines of “If the customers like it, it will sell” and so on. Earlier when I was inquiring about India Gate the same way, the response was a unanimous “Most customers prefer India Gate”. I didn’t find the same enthusiasm in this case.

I don’t want to make this a ‘Sample size of one’ argument. I just thought it would be useful feedback on what’s happening with Continental products in Chennai.


(Vijay) #349

When leo launched it’s product, they gave small size at a good discount. Selling smaller size does help people discover a brand. I hope they try it sooner or later.


(Vshah198510) #350

It needs more visibility in terms of creating a brand.

A good place would be to start would be stocking the sachets in hotels where they can greater retail visibility for a coffee lover who would love to try a cup free in the hotel room.
Offering tasting sessions at Dmart, Reliance, malls, etc. where the retailer will have a visible brand in front.

They do sell cheaper with compared to a BRU or Nescafe and are in line with the taste but a more visible brand is more acceptable.


(onlish2014) #351

They already have positioned in hotels as I and couple other boarders have shared (eg post #310). I have found their sachets next to Nescafe and sometimes even exclusively in North India.


(Vijay) #352

When Tata Grand coffee launched , they offered 10 rupees packet with buy 1 get 1 free. I see that CCL does the buy 1 get 1 free offer but the price is 325.