Slowdown forces Emami to delay new launches, male-grooming range hit badly

the underperformance of winter portfolio, decline in male grooming range lead to flat Q3 revenue growth

The ongoing slowdown is prompting Emami Ltd to go slow on new launches.

“It is not that we haven’t launched any new products in the past few quarters or will not launch going forward. We will be now more cautious with new launches as we do not want to take unnecessary risk at this point of time, when consumer sentiment is weak,” Harsha V. Agarwal, director at Emami Ltd told Business Standard.

According to the company, its male-grooming range was particularly under sustained pressure due to the ongoing adverse environment in discretionary consumption, leading to a revenue decline of 39 per cent during the third quarter (Q3) of the current fiscal year. The underperformance of its winter portfolio and decline in male grooming range led to flat revenue growth during the quarter.

All the launches till date this year have been in the healthcare portfolio under the Zandu brand. Emami launched Zandu SwasthyaVeda Revitalizer, an Ayurvedic tonic for healthy ageing, followed by Zandu Ayurvedic Cough Syrup, a formulation that does not induce drowsiness. In the womencare range, Zandu Striveda Menso-Ease, aimed at young consumers who face menstrual hardships has also been launched. Under the Rs 1,000 crore brand, Navratna, a warm oil for the winter season was expanded across north and central India.

Mohan Goenka, director, Emami Ltd, indicated during an investor call that the company intends to launch a slew of products and brands, and that market conditions will stabilise in the next two to three quarters. The recovery is expected to be driven largely by higher spending by the government on rural infrastructure and better agricultural GDP growth.

 

Abneesh Roy, executive vice president-institutional equities, Edelweiss Securities, said it is rational for Emami to delay rolling new products when an uptick in consumption is questionable, as it would help derisk the exposure to an extent.

In the last fiscal year, Emami had launched products across portfolio. In the male grooming range, HE Magic Duo, a new package offering two distinct fragrances in one bottle was launched followed by the 5-in-1 Pimple Clear Instant Fairness Facewash in the Fair and Handsome brand. In the Zandu brand, Diabrishta-21, a formulation which diabetic consumers can consume along with their regular medication to improve their daily health, was launched. In the womenscare range, Zandu Striveda Lactation Supplement, aimed at improving lactation among nursing mothers, was also launched.

“Our existing brands still offer a lot of potential for growth. We want to leverage our existing brands by investing in them for fuelling further growth. We constantly evaluate opportunities for launching new products mostly as an extension of our existing brands in order to strengthen the core power brands”, Agarwal said.

According to the company, despite the muted environment in Q3, its pain-management range grew by 13 per cent, Navratna grew by 11 per cent, Kesh King range grew by 18 per cent, 7 Oils in One grew by 66 per cent and healthcare range grew by four per cent; while male grooming led by the HE brand declined by 39 per cent and BoroPlus range declined by 12 per cent.

Goenka said that corrective steps to check the decline in male grooming is being undertaken which would yield results in the first quarter of the next fiscal year but did not detail on the initiatives. The new launches, once the market stabilises is expected majorly in healthcare and personal care segments.