Dabur, Nestle, Emami shelve brands, prune staff & stall launches amid slow demand & D2C pressure

Economic Times

2 days ago

Packaged goods companies are either discontinuing non-performing brands, shelving expansion plans in slow-moving categories, or pruning manpower costs, amid challenging demand conditions, and in expectation of demand revival in core businesses over the next two quarters.
Nestle India has phased out select variants of Maggi noodles such as Maggi chatpata and teekha, while homegrown Dabur India said last week it has exited diaper, tea, and health drink businesses as part of a portfolio rationalisation and to sharpen focus on core categories.
Facing "mixed reaction" to its Sting Gold energy drink, PepsiCo's bottling partner Varun Beverages Ltd (VBL) said it is evaluating "traction among consumers"."We are rationalising manpower costs. Sales of large packs declined due to unseasonal rains, since there were less outdoor events and functions," said Varun Jaipuria, executive vice-chairman, VBL, on a quarterly earnings call last week. "We also couldn't add temporary shops particularly in rural markets in summer, which we do otherwise."Almost all makers of summer-centric products such as soft drinks, cold juices, and ice-creams, who tend to set up temporary small shops, especially in small towns and rural markets to cater to seasonal demand, had to abort their plans this year following unseasonal and consistent rains since March. The weather office predicted that India is likely to receive above-normal rainfall in the second half of the monsoon season during August and September. The first half saw above-normal rainfall, with some regions like Himachal Pradesh reporting flash floods and landslides.
Distributors noted that previously companies would test market products for at least 12-15 months before discontinuing them if sales lag expectations, which has since narrowed to only a few months."At least two dozen low-performing sub-brands are going off shelves across tea, Ayurvedic creams and oral care, toothpaste, and soap, owned by large-listed companies, something that's unprecedented within a short phase. These companies have told us that after the present stocks are exhausted, there will be no future replenishment," said an executive at a prominent distributor of FMCG products in New Delhi. "Taking up shelf space, transportation of such packs all add to costs," he said, asking not to be named, citing confidentiality clauses.
Emami's hair oil business led by the Kesh King brand declined 5% year-on-year, particularly impacted by direct-to-consumer (D2C) or online-only brands, while male grooming fell 9% year-on-year. The company is currently revamping these businesses with "strategic transformations". Emami, which also makes BoroPlus cream and Dermicool talc, said it will relaunch the Kesh King hair oil franchise in the current quarter to improve brand relevance and future growth. "The Man Company is undergoing a brand revamp with a sharper positioning," Emami said in the management commentary of its June quarter results.It highlighted the emergence of D2C competitors "as a significant challenge, particularly in the male grooming category."Most listed FMCG companies have provided guidance of high single-digit growth for FY26, on the back of sequential demand recovery, aided by a better-than-expected monsoon, easing food inflation, rural momentum and green shoots of urban revival. Research firm Numerator, formerly Kantar, said in a report last week that demand for groceries, and household and personal care, slowed to 3.9% by volume year-on-year in the June quarter, impacted by unseasonal rains.