Study says strong advertising helped Nestle Malaysia's domestic growth

Nestle Malaysia's quarterly revenue growth secured a sturdy finish in fiscal year (FY) 2016. A research byMIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) said "aggressive advertising" has delivered strong growth in the domestic segment.

This resulted in the company's domestic share rising from 14.5% in FY14 to 15.8% in FY15. This, accompanied by strong performance of the export segment, has added to the company's growth revenue as exports make up 20% of the group’s total revenue.

Locally, Nestle Malaysia had also tied-up with online retailers such as Lazada and 11street to launch its wellness electronic stores on both their online shopping platforms. It is aimed to generate RM500 million in revenue from its e-commerce business within the next few years, according to several media reports.

Last year, Alois Hofbauer, managing director, Nestlé Malaysia, stated that the company's business was driven by strong marketing activities and new product launches “which saw the group continue to strengthen its market share position in its key product categories.”

Hofbauer added that innovation will be a key pillar in Nestle Malaysia’s growth strategy going forward. This rang true as the report stated that product innovation is one of the key factors that has led to this revenue growth. For instance, FY15, an approximate amount generated from new product launches accounted was 10% of the group's total revenue. This was approximately RM400 million.

The report highlighted that the company's first quarter to third quarter recorded a sequential growth of 2.8%, 8.2% and 3.7% respectively. Moreover, the report attributed the stable growth to product innovation and strong growth from both domestic and export segments.

Nestle Malaysia's stand on not increasing product prices has also worked in favor of the company. In order to deal with rising costs, the company has introduced efficiency programs along its supply chain to streamline revenue.