How does Nescafe compare with Bru considering that both have similar market shares with Nescafe only slightly higher . With Nescafe instant available for 238 for 100 gems after discount on flipkart while Bru instant 100 gm is rs 164 . So there is clear pricing power with Nestle Nescafe and just similar market shares doesnt reveal much . There seems to be great scope of premiumisation with Nescafe Gold 100 gm at 446 while Bru gold 100 gm at 233 . So pricing power is at its maximum in premium segments and with the launching of more premium products , this market share wonât show the complete picture .
Another bit off topic thing but in continuation to Nescafe vs hul , Nestle seems more focused vs hul as itâs no 1 in its main segments as compared to HUL which is no 2 . Even in detergents etc Procter and gamble home (unlisted) is the market leader or say godrej is no 1 in household insecticides or gillette no 1 in razor or pghh in sanitary napkin or jyoti no 1 in Ujalai.e fabric whitener . I believe ( I may be wrong ) the priority is more on broadening of portfolio and as a result the wide base , compounding isnt as high as a Nestle . The current emphasis on premiumisation may help but believe it wont be enough to move the needle . Hence HUL, despite being good company and risk free , doesnât qualify IMHO as consistent compounder franchise like Nestle , Asian paints etc . Moreover the input cost impact is material on HUL which is not as much in Nestle .
Can you pls elaborate on the reason for this. Thanks
@Investor_No_1, As an example HUL has crude oil as an input material in its detergent products which has an impact on its input cost and pricing power of HUL over the years hasnât been that strong when compared to Nestle .
One of the extracts from a bit dated article
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Even sequentially, the companyâs gross marginâthe difference between sales and material costs expressed as a percentage of salesâdeclined.
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The chief risk to valuations is if input costs keep rising and HUL remains behind the curve on increasing prices, as that can affect profitability.
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It takes very small price increases to offset partially the above but they are few and far in between as compared to Nestle. often they have been comparing their growth or FMCG sector growth with growth of the economy while companies like Nestle are exceeding with higher growth than growth of the economy on a consistent basis .
Very interesting thoughts and unique way to look at it. Do you have any thoughts on real long term investing say decade or two in any Indian FMCG home grown player as well? And how do you think a Marico, Godrej, dabur, Britannia or a pidilite fare as compared to nestle or even an hul? Thanks!
Thanks for the kind words @Investor_No_1
In case of a long term portfolio , what matters more for me is the consistency of steady growth and oppurtunity size . However i would personally think of investment for maximum 5 year point of view and then decide according to situation then as in this times , IMHO 5 years is long term although FMCG is supposed to be least disruption free . But who knows ?
One of the sectors considered to be least disruptive (atleast till now ) and less prone to recession is FMCG and hence IMHO its a great sector for investment. I believe Indian FMCG players have great oppurtunity in front of them due two things
1 sheer oppurtunity size in our country
2 Exploring export markets
3 Increasing premiumisation within product categories thereby increasing operating leverage
4 Enhancing of product range and introduction of new products or sub categories within categories
Market leaders would have a higher scope as compared to "All products companies " in view of the enhanced focus .
1 Marico - Marico apart from its leadership in oil is going a long way in introducing premium products with higher margins and are very agile in the sense that they did not rest on their laurels on Parachute as they knew that modern market demands differentiated products and inspite of Parachute still being the market leader in its category , they have introduced a host of products for changing consumer requirements and introducing constantly male grooming products too like gels, studio x etc.
Apart from this they have great products in the health food category in terms of Saffola etc which is another market that they are very bullish on and they are constantly introducing products such as masala oats etc . Its a company that has been a consistent compounder and would surely deserve place in my real long term portfolio . They are also having great traction in their markets in South Asia, Africa and middle east . Management is very pro active and would recommend you to read about Marico in the unusual Billionaires in case you havent already .
Management proactiveness can be seen from the below statement too
2 Godrej Consumer
This is another FMCG company i.e a market leader in its niche segment . They are market leaders in household insecticides where they are number 1 and are also tapping the export markets .They are
no 2 soap company and are expanding outside India pretty well especially in their niche âhair segmentâ in Africa where they have also acquired a strong company . The hair segment is an almost created category and oppurtunity remains huge as well as scalability . However i wouldnt put the company in the same league as a Nestle or a Marico . So the oppurtunity is domestic growth as well as international .
3 Britannia -
They have grown very well in last few years after Mr Varun Berry took over and he augmented the distribution network (He is ex pepsi co and distribution network of Pepsi etc is extensive ). Besides there is a focus since last few years on pushing of premium products that has helped the profitability apart from adding dairy segment . Currently biscuits form approx 75% of revenue which he plans to reduce and increase dairy and focus is on profitability and growth .
4 Pidilite
Market leader with approx 70% market share and a truly âstickyâ product . Great company but currently available at FMCG valuation
5 Gillette - A market leader in its category with not meaningful competition in shaving razors although there are a couple of start up companies but currently they dont seem to scale up that well and would be difficult to dislodge Gillette IMHO . Gillette India spends a significant portion on R&D. They also hold Oral B brand of tooth brush which is also a market leader although revenue from this forms about 20% of overall .
6 Dabur - Dont have much idea on the same except that they have a great portfolio of products as well as distribution and external markets but they dont seem to be aggressive on growth . Patanjali has helped in expanding the ayurveda/natural/herbal products market significantly and i believe that should help Dabur with its huge portfolio of products . They seem to innovate too , eg Dabur Honitus Hot sip (instant ayurvedic kadha sachet) can be used even while travelling which just needs to be added with hot water (which is available everywhere ) . So this is an important innovation whereas most products seem to be available in bottle form and easy to carry too
7 PGHH - Another company with great oppurtunity size after they augmented their distribution network but havent seen growth since last few years . Whisper is a market leader with approx 50% or more market share although this is based on some old survey and am not aware of exact current market share
Disclosure - Holding some of the stocks from those listed above .I am not a SEBI registered analyst and these are not recommendations . One should do their own due diligence before investing .
Milkybar Moosha Cocoa Crispies builds on to the familiar creamy taste of Milkybar and has added cocoa crispies - giving it a combination of creamy and crispy. In the last quarter of 2017, we launched Milkybar Moosha, a sub-brand of Milkybar with varied textures, flavours and other inclusions. Moosha Cocoa Crispies is an addition to the portfolio for consumers who seek something new, exciting and multi-textural.
The chocolate and confectionery category sees a lot of innovations and limited edition launches, but the challenge is sustaining them.
The white chocolate brand sees competition from Mondelezâs Cadbury Dream, Amul Super Fruit, Ferrero Raffaello Coconut and Almond White Chocolate, Hersheyâs Kisses, Godiva Chocolatier White Chocolate, Lindt & Sprungli White Chocolate.
NINA is one of Indiaâs first Corporate Service Brand â AskNestlĂ© and is built to assist young parents create healthy meal plans, smart recipes and food hacks for their children up to from 2 to 12yrs of age.
AskNestlĂ©âs NINA is designed to interact with users in a human-like manner and will offer real-time, personalized advice on nutrition that is balanced, scientifically correct and customized to their unique needs. Integrated with Google voice assistant, NINA helps mothers even feed fussy eaters a balanced diet, by suggesting creative ways of providing nutritious food and even recipes, while giving tips and hacks to make meals appetizing for kids. NINA makes meal plan recommendations based on allergy, food type and even regional preferences.
Q2 CY19 Result Analysis
Nirmal Bang
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Export sales are weak on account of lower coffee exports to Turkey.
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Maggi, Kitkat and Munch continue to perform strongly and the company has announced its 9th factory in Sanand, Gujarat for Maggi Noodles, which will involve an initial investment of Rs7bn over the next two years.
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The company continues to strengthen its innovation agenda with new launches in CEREGROW NESTEA and Maggi range.
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Considering the fact that the company continues to strengthen its innovation agenda and with its recent plan to enter the organic food segment, we feel fairly confident that it will be able to deliver healthy volume growth.
ICICI Direct
http://content.icicidirect.com/mailimages/IDirect_Nestle_Q2CY19.pdf
NIL has adopted a hyper-local model for marketing and distribution, which will help increase penetration and expand reach, thereby leading to faster growth. Under this, NIL has divided India into 15 different clusters wherein each cluster will be treated differently based on factors like food preference, income evel, etc. We believe these distribution initiatives by the company will drive market penetration and improve the efficiency and quality of distribution.
Update
Presentation used for Financial Analysts / Institutional Investors Meet on 9th August, 2019
Webcast
Prabhudas Lilladher report
It is interesting to see Nestleâs growth and focus on Confectionery segment.
The market share (value) for the past years: (couldnât compare previously as they reported separately under âWhite & Wafersâ and âChocolatesâ)
H1 2018 - 61.1%
CY2018 - 61.9%
H1 2019 - 63.4%
Saw this at local supermarket:
Good shelf space
Available in bigger SKUs
Till H119, confectionery grew at 22% and I guess this growth should sustain going forward.
Dividends
A good portion of a stock return also comes from dividends apart from capital gains, particularly so for FMCG companies.
Dividends grew at a CAGR of about 17% (12.41% excluding FY19 special dividend). Market Cap grew at a CAGR of 19.3%. The dividend reinvested CAGR should be even good. 
These returns are that of the past 18 years.
Disc: I own Nestle India.
Some highlights
Narayanan said there were still market opportunities to tap for the company.
âPenetration levels of categories we are in are relatively lower. We still have runway for growth and we are also looking at accelerating our rural footprint,â he said. âWe are innovating at five times the pace than in the past and with increasing urbanisation, we are stepping up the power of innovation.â
"If the industry gets its operational efficiencies on track and combined with renovation and innovation, it will be able to counter the economic slowdown, Narayanan said. âWe are fairly confident we will be able to bring in innovation-led volume growth. With relevant focus on advertising and marketing in difficult times, we believe some of our brands can be strengthened.â
Nestle Ind to be included in Nifty
article dated by 2 months but seems not so good news.
I used to consider Nestle in the league of HUL in the sense that both these MNC introduce all new products through their listed entity in India unlike pghh, Gillette, maruti etc . However just came across old news that they have launched their pet products through their non listed new entity purina .
I didnât invest in pghh for precisely the same reasons despite it being a quality company and rightly pointed out to me by @sujay85 timely . Am invested in Nestle . The reason given by them is synergies etc . Another reason that they gave is lack of related professionals in Nestle India for pet segment . But instead of starting a new company can they not recruit the necessary talent under a wholly owned subsidiary? But does this signal a new trend by them ? If yes , then might have to reconsider my investment despite not wanting to do so . Request all your views
I think they had explained it well if I remember correctly. They didnât want their Nestle brand to be diluted in India which stands for premium food brand. Unlike in west where pets have been humanized and households consider them as kids and spend equally, in India except for few elite families unfortunate dogs are only dogs and few states in NE where dogs can be eaten 
So, mixing up Nestle brand with pet food is not a great idea for shareholders.
A visit at a nearby departmental store in Mumbai showed more space allocated to Nestle as compared to earlier and lots of new products being introduced in line with their strategy of three dozen products introduction with management had indicated over a period .
https://m.timesofindia.com/business/india-business/nestle-india-plans-up-to-3-dozen-product-launches-in-2019-eyes-higher-exports/articleshow/68049780.cms
saw Kitkat many variants like Dessert and dark chocolate priced higher than plain Kitkat and so higher margins.
Nestle hazelnut coffee and other taste tetrapack priced at Rs 35 much higher than Britannia cowmoo priced at Rs 25 (Another indicator of the pricing power enjoyed by Nestle )
And an acquaintance who has a shop told that Nestle hazelnut tetrapack is more in demand compared to other such tetrapacks except Amul although this might be wrong due to a very small sample size . But if correct , the reasons could be quality perception of Nestle in the minds of consumers and Nestle being all long a dairy brand
New types of Maggi introduced like Fusian maggi (although the Amazon reviews havent been good )
Products like Nestle dark choclate costing Rs 800 for two (on amazon with just 10 percent of discount at 720 - indication of pricing power and still great reviews NestlĂ© LES RECETTES DE LâAtelier Swiss Chocolate - Cranberries Almonds Dark Chocolate - 390g (Pack of 2 Tablets). Although the reviews are only six, but its a new product .
Disc - Invested . Am not a sebi registered analyst and pls do your own due diligence before investing
There are only 7 states in the NE and only one where a few ethnic groups eat dogs. That has also reduced drastically in recent decades.
I am not a fan of dogs and to me a chicken or a dog makes no difference, but I just wanted to correct the statement since most of of India seems to have inaccurate information about the NE.
p.s. I love tigers. Gorgeous animals and they mostly keep to themselves except when hunting 
Thanks for correcting me.
Yes, I agree with you.
Some of the new / relaunched brands that now command descent shelf space ( nothing like Cadbury though ) at various local / Modern Retail stores include-
Nescafe ( ready to drink cold coffee ), Kit Kat ( new variants ), BarOne , Milky bar and Munch ( increased visibility , infact BarOne and Milky Bar had almost gone invisible to my eyes a few years ago ), new packs of 10/20 chocolates of mini Kit Kats and Munch ( just like Snickers ).
Sample size includes more than one Brand of Modern Retail Stores and various grocery / chemist shops in Gujarat and Punjab.
All these are encouraging signs.
We need not even talk about the likes of Maggi / its variants, Cerelac, Lactogen, Nan Pro, Care Grow, Nescafe etc.
Disc: invested.