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Informist, Monday, Aug 26, 2024

 

--Sources: Emami aims for higher revenue share from premium brands

--Sources: Emami eyes 20-21% growth rate for premium brands FY25

--Sources: Emami eyes 2.8-bln-rupee revenue from premium brands FY25

 

By Avishek Rakshit

 

KOLKATA – Emami Ltd aims to increase the revenue contribution from premium products to 8% from the current 6%, even as it expects to remain a largely mass-products player, sources aware of the development told Informist. This, the sources said, could help Emami expand further into the urban market and offset any negative impact on its revenue, particularly from rural markets.

 

In the current financial year started April, Emami is eyeing revenue of around 2.8 bln rupees from premium brands, one of the sources said. Thus, the company expects the premium portfolio to register sales growth of 20-21% this financial year, even as growth in its core portfolio could be much lower.

 

While the company does not draw a line between premium and non-premium products, products under The Man Company and Brillare brands are considered premium and are priced much higher compared to other Emami brands. During the financial year ended March, these brands, which Emami considers strategic, earned around 2.3 bln rupees of revenue. This translated into contribution of 6.4% towards the total revenue.

 

Sources said that currently, the revenue contribution from The Man Company and Brillare brands, which sells professional salon and male grooming products, is low compared to core brands such as Navratna, Zandu, and Boroplus. As these premium brands have more headroom for revenue growth, Emami is targeting higher growth from them. 

 

"Sales under the Brillare brand are growing faster than those under The Man Company," one of the sources said.

 

Emami did not respond to an email seeking comments on the development.

 

However, sources said increasing sales in the premium portfolio might not necessarily translate into higher profits or margins for Emami. During the year ended March, losses from the Brillare brand were 101.2 mln rupees, around 11% lower year-on-year. The Man Company, however, made a profit of 88.3 mln rupees, compared to the 220.4-mln-rupee loss the previous year.

 

Taken together, the premium brands are currently in losses and account for a minor share in revenue, but these brands are important for the company. 

 

Although the revenue share from seasonal brands has been decreasing, during Apr-Jun, around half of Emami's revenues came from its summer portfolio, which is not just seasonal but rural-focused as well. Its strong brands like Navratna and Kesh King are mostly sold in rural areas, while Boroplus has some salience in urban and semi-urban markets.

 

"It is with The Man Company and Brillare brands primarily that Emami can further tap the potential in urban markets in premium product category, and moreover, these brands are not seasonal. So, the revenue from these brands does not largely depend on summer or winter, but on brand positioning and the scale of advertising," one of the sources said.

 

In a call with investors after announcing its financial results for Apr-Jun earlier this month, Emami's Vice-Chairman and Wholetime Director Mohan Goenka said the company would continue to increase its advertising budgets. "Advertising budgets have increased significantly over the last two quarters. This quarter (Apr-Jun) also increased by 21%. And going forward also, we are going to be extremely aggressive in terms of trends, launches and lot happening honestly," he told investors.

 

At 1241 IST, shares of Emami Ltd were up 1.8% at 823.10 rupees on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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