Feb 18, 2021
Nestlé’s sales through e-commerce channels have more than doubled since last year and now contribute 3.7% to its total domestic sales. The maker of Maggi noodles and Nescafe coffee said about 75% of its products grew double-digit last year, riding on strong in-home consumption.
Volume-led domestic sales growth and improved out-of-home consumption helped the country’s largest packaged foods company report 9% increase in revenues to Rs 3,432.6 crore for the quarter ended December 2020. The maker of Maggi noodles and Nescafe coffee, however, reported marginal net profit increase of 2.25% at Rs 483 crore.
Nestle chairman Suresh Narayanan said that nearly two-thirds of our key brands like Maggi noodles, KitKat and Nescafe posted double-digit growth last year. Analysts said Nestlé’s high staff costs partially negated gross margin expansion, with employee costs up sharply at 25% year-on-year due to higher Covid-linked incentives. The current quarter was further impacted due to the finalization of long-term compensation arrangements for most factory employees.
Total expenses in the quarter increased 8.3% year-on-year to Rs 2,793 crore, which Nestle said was on account of an 11.3% increase in other expenses.
Pure play packaged foods companies have seen sales normalizing to pre-Covid levels, down from the surge they witnessed in the June and September quarters, with the gradual reopening of malls, restaurants, and travel.