Superb competitors: Why Super Group is losing ground in the race for new markets

Expect muted growth in 2014.

Super Group’s long-term plans for growth are yet to take effect. In the meantime, the company is fighting a losing battle against its more aggressive competitors, hampered by low penetration in new markets and muted sales in 1Q14.

According to OSK DMG, competition for Super is intensifying across the region with market leader Nestle and other new entrants stepping up their game with aggressive promotions and new flavours.

Super could also be hit by a potential decline in Thailand’s consumption and lacklustre revenue growth thanks to depreciation of the Myanmar Kyat.

“Super is expected to see muted sales growth especially since it does not have substantial penetration in new markets like Indonesia and the Philippines. Following a 6% YoY sales decline in its branded consumer segment in 1Q14, management lowered their growth guidance to 5-10% going forward. But growth guidance is expected to be cut further in the upcoming 2Q14. The company is taking positive long-term steps such as rebranding, new product innovation and increasing production capacities. But near-term headwinds suggest current valuations are too demanding,” noted the report.