FMCG industry at large has been reporting muted revenue and volume growth and a consumption slowdown is looming large. Prataap Snacks which is located in Indore has emerged an outlier in the first quarter of 2019/20.
The company's organic revenue growth improved to 8 percent relative to a 1 percent decline seen in Q4 2018/19. The preceding quarters saw a growth of just 2 percent. The company's overall revenue growth was 23 percent in Q1 2019/20, which came on the back of its acquisition of the Gujarat-based snack company Avadh Snacks. "We had been growing at 15-20 percent for the last five-seven years. Last year was an exception when we grew by just 8 percent. From the first quarter, we started recovering and now we are back on track," says MD and CEO, Prataap Snacks, Amit Kumat. So, what did Prataap Snacks do to get back its growth momentum? They also launched more variants in Rs 5-10 price points, not just in salty snacks but also sweet products such as cupcakes, cookies, cakes, and choco vanilla cake, which have done well. The cake within a year of the launch generated business. The strategic decision that turned around the business was the company's decision to manufacture closer to the market. The trigger for this was the slowdown in the auto and consumer durable segments.
Prataap Snacks has always worked on a reverse logistic model. The company had dealt with companies such as Maruti and LG, which used to ship their products to Indore and adjoining areas. After they delivered to retailers, the empty trucks used to get loaded with goodies from Prataap, which used to be distributed in the North and other parts of the country.
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