Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Sundrop Brands Ltd (NSE: SUNDROP) Q4 2026 Earnings Call dated May. 08, 2026
Corporate Participants:
Nitish Bajaj — Group Managing Director
Asheesh Kumar Sharma — Chief Executive Officer And Executive Director
Analysts:
Ajay Thakur — Analyst
Shirish — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to The Sundrop Brands Limited Q4NFY 26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. I now hand the conference over to Mr. Ajay Thakur from Anand Rati Securities. Thank you. And over to you sir.
Ajay Thakur — Analyst
Hi everyone. Thanks for attending the call from the management side. We have with us Mr. Nitish Group Managing Director, Mr. Ashish Kumar Sharma, CEO and Executive Director Mr. KPN Srinivas, CFO. Without you know, wasting much of a time, I would like to hand over the call to Mr. Nitesh Bachaj for his opening comment and followed by the Q and A session. Over to you sir.
Nitish Bajaj — Group Managing Director
Right. Thank you so much Ajay. And good morning to all the participants. Good afternoon to all the participants in this program. I will start with the presentation. I hope you have the slide deck with you for sake of because we are on the call, I will keep talking about the page number on which I am so that you can relate to the slides which I am referring to while making my commentary. So I will move straight to slide number three for investors who are joining for the first time for this call. It’s just a brief recap of our vision.
So as an organization, Sunza Ground is committed to bringing joyful food experiences to the modern evolving consumers. And we continue to do so by ensuring that we launch innovative, delicious and more convenient packaged food solutions for our consumers. A quick moving on to page slide number four. A quick recap of our investment thesis. Tanga Brands. As you know, with the acquisition of Del Monte Food which happened in February 2025, it has become a larger scaled food platform. And because of the intrinsic nature of the portfolio of categories we are in and the brands we have, we do have very significant growth opportunities sitting in this portfolio.
What sets us cemented on the path of this strong performance? One of course the kind of categories we are present in. Each of these categories reflect a very strong growth opportunities, are intrinsically high growth categories with good opportunity to expand both penetration and consumption. And also they are fairly margin strong categories where we operate, what we do as a management, what we bring on table is of course a very strong renewed focus on driving growth of the core portfolio of brands.
So when we went into this new journey for some broad brands about a Year and a half back we did take a call to focus on certain core categories and we are staying invested in a bigger way as we move on the journey for accelerating growth on these businesses. Also, if you look at our channel play, this organization has a very strong channel footprint spanning almost the entire spectrum of food categories. So from Del Monte side we bring in the presence to a very strong B2B network. From Sundrop side we bring the presence to very strong B2C network.
If I talk about the high growth channel which is modern trade and E commerce, both companies are very strongly embedded in both channels. So very strong footprint and very strongly in fast growing channels is what we do have in the portfolio. Overall. From a direction point of view, the focus of management is to drive for profitable growth and hence we are consistently working with a very strong capital efficient approach for our investments so that we keep building scale and profitability together.
What it also means is as we keep building our scale and profitability and ensure we create sufficiently strong capital reserve, we will continue to look for opportunities both for organic growth driven through investments in the current portfolio and also any inorganic opportunities which would be interesting and a strong fit to our portfolio. Moving on to slide number five, Sundrop brands as you are aware is a combination of three very, very strong, powerful market leading brands. At the core of it is Sundrop, which is what the company originated with.
And we have of course two international brands, Acto and Del Monte where we own a perpetual license for these brands in the greater India subcontinent. Now coming on to results, I’m moving on to slide number six. So this is of course this quarter has continued on a very strong growth trajectory for us as a business. We have delivered a revenue growth of 11% in the entire trophy business consolidated for some drops and Del Monte put together. Specifically talking about our B2B business which is unique for Del Monte business where we have continued again with a very strong growth of 12%.
So both B2C and B2B business continue to be on a strong growth trajectory for business. Talking about our emerging channel footprint which is our E commerce business, again a very strong growth of 26% driven by increased investments going into this portfolio. So that also continues to shift very strongly for our business. What you will see in the presentation ahead that advertisement investment looks to have fallen down. But from real perspective for a like to like comparison, we had a flat quarter on the investment side.
Why it’s important to see in the different contexts because we really started our aggressive investment journey from quarter four of FY25 so after the new set of promoters came in to the business we have started investing very strongly on the portfolio from quarter four of last year itself. So on that base the advertising investment is flat. But intrinsically if I look at from our overall investment strategy we continue to spend close to 5 to 6% of our top line on advertising, much higher than what we were doing let’s say a year to two years back.
So that direction of investment continues on advertising and driving the growth of the business. We have talked about this in the previous investor meetings, also about the entire efforts which are going on on ensuring efficiencies, costs takeouts, sitting in the consolidated organization. Really happy to state that this journey has moved even further forward and and we had a significant gross margin expansion of close to 4% in this quarter versus same quarter last year. As an outcome of these our EBITDA has grown very sharply.
We have had a very significant growth. I haven’t called out the growth number in this quarter presentation because last year was very negligible EBITDA and hence what I’m really calling out is that our EBITDA margin has moved to close to 7.2%. Just also for the this is EBITDA margin reflecting net of one off spend and also the ESOP expenses which are non cash expenses in nature. So that has moved very strongly and overall our EBITDA for the quarter was close to 28 crore excluding ESOPs and one off expenses.
Moving on to full year I’m on slide 7 full year 26 very similar performance. 10% growth at a consolidated level, 11% growth in our B2B business E commerce growth was stronger at 35%. Overall we invested close to 18% expansion in our advertising expenses which is ahead of what we are driving in terms of growth. So we continue to drive ahead of our investments for driving accelerated growth. Overall margin expansion for the year stood at 270 basis points. What is important is that as we have gone through the year we have seen consistent margin expansion and hence our EBITDA also has consistently moved forward.
Our EBITDA overall in the year has grown by close to 96% and at the end of full year our EBITDA gained in context of netA1 of expenses and about 5.7% of compliance and this is a significant expansion of EBITDA from what we had earlier before moving on to slide number 8. Overall if you look at Sundrop and Delmonte put together Sundrop accounts for 57% of our revenue. Delmonte accounts for 43%. We are seeing very strong growth in both organization. And we have also seen growth acceleration specifically in Sandrock.
If you look at our growth has moved upwards from 5% to last year to 12% in FY26. And quarter four has been even ahead of about 14% growth. If I do the same context for Del Monte, the larger year has been at a very stable growth trajectory of 9%. It looks lower than what you had in 13%. But it’s important to call out one event which has impacted this number overall. If you look at our olive oil business, which is about 16% of our revenue for Del Monte as a business, that business has seen deflation in the commodity prices.
We have passed on those price reductions to the consumer because of which the value growth on Del Monte business has been. Del Mante olive oil business has been negative. In volume terms, the olive oil business is growing at close to 16%. So while in value terms the entire Italian business is declining by 5%. So netweight there is almost like a 20% delta impact because of passing the benefit of reduced commodity prices to the consumer. And on a 16% base, that 16% total base of that business, it means almost like a 3% diversion in the overall growth.
So my net take out is this business is intrinsically going closer to 17% even in this year. Having said that, as we go into the next year where it will be intrinsically volume growth because price adjustments have been done all in the previous year. We would see strong accelerated growth coming back in value terms in any wine business. Also moving on to slide number nine. This is the context of core categories where we invest and this call we have taken right from FY75,404 onwards. These are categories we see as strong growth period.
So in the context of Sundrop, this is the entire business of popcorn. It is our business of spreads, you know, better spreads. And also our business where we are emerging as a strong growth which is the business of great casinos. Similarly in the context of Bell Monte, which is the entire business of stretcher, Sassy Neones and Italian range. And these are the portfolios where we are doing increasing marketing investments to worldwide. This portfolio as a result of our investment is now increasingly taking an increasing share of our business.
And over a period of last three years, we have moved the saliency of this business to 62% plus. And there is also of course a quarter on quarter improvement in this. So last quarter this portfolio used to be about 61%. In quarter four this has moved to about 62% of our total portfolio moving on to slide number 10. This is a reflection of how our core categories where we are investing are doing at the overall level. If you look at most of our categories where we play, most of the portfolios where we play are demonstrating strong volume and value growth in Durham.
If I look at Popcorn as a business growing at 12% in volume and 18% in value terms, our culinary business which is a combination of ketchups and mayo growing at 8% in volume and 10% in value terms, premium stickers which is already the loyal business has done very smartly in this quarter. We have grown at about 15% in volume terms and 20% in value. And I talk about what shifts we have made in this business. But this actually is a good sign because historically this business used to be one which would decline for us.
So we have changed certain investment strategies and mixes which is helping us accelerate the growth in volume terms in this business. Italian business I talked about grow in quarter four in volume terms by about 17% volume terms it is still a decline of 4% net net. There is still important point is this business, if it continues to maintain our growth momentum and volume next year it would reflect very strong volume and value growth which we are as a management continue to drive spread business which is our clean and better business continues to be a source of opportunity plus also a bubble for us because while we have been bringing new initiatives and I’ll talk about some of this, we are yet to see recovery in this business even in Kodakur.
But I’ll talk about some of the initiatives we are going to turn around this business also as I move ahead in my presentation. Moving on to slide number 11, very similar performance across categories at the full year level also we are clearly seeing all categories reflecting very similar momentum in London and Value Fund. The one where we do see some difference. Of course I talked about premium staple or edible oil business where our volume growth trajectory has moved significantly upwards from a 3% volume growth at the full year level to a 15% volume growth in quarter four.
Rest of the business are very similar at full year level and quarter four level. I’ll now give you some context of how we are doing in various categories. I’m moving on to slide number 12 Topcoin which is the core of our F2 franchise business and also very central to Sundrop’s brand as a company is shaping up very very strongly. We are a number one player in both Ready to Cook and Ready to eat Comnets and by far we hold close to 80% plus share of this category, both Ready to Cook which is sitting at home consumption dominantly and Ready to Eat which is on the go consumption at home or outside of home are responding very very strongly.
Ready to Cook business is growing at about 8% and we have seen sequential improvements over four quarters into this business. So our production growth is sharper closer to about 10 11% versus our blended full year growth at about 8%. What has driven this growth is we have invested of course on advertising promotion of this business trying to scale up our E commerce business sharper. We also did work around expanding the consumption in a single household by launching bigger volume pack. These packs have now taken close to about 6 to 7% share of the Ready to Cook business and hence they also would help us continue to drive volume consumption within the household.
While we continue to drive the penetration in this category through our rotate impact in the RTE or the Ready to Eat outside of home consumption and also on the go consumption, we have seen accelerated growth driven by two key commits. One is we continue to work on distribution expansion and there is a significant headroom in our current assessment we directly reach to about close to 4 and a half to 5 lakh outlets through our own network. But outside of this network also we do reach out because the business is becoming much larger on the go and goes into very small outlets as well.
We are seeing significant distribution expansion through the wholesale and hopper network in this which is continue to drive an accelerated growth in this business. Having said that, our assessment will be we are still close to a million outlets and there is a very large headroom to go expand this business through a combination of distribution expansion in general trade and of course consumption on the go which is seeing an increasing tailwind because of the expanding good commerce channel in the country.
So in both these segments we are seeing IPE business shaping very strongly. We continue to innovate bring new offerings in this category especially in the high growth ITE business. We did launch two new flavors in this category. One is Saltim and Wasabi and of course some more variants which got launched during the full year perspective. Also in addition to that we are also building our nachos business by taking it for a wider distribution footprint through the launch of 10 platform elsewhere. Moving on to slide number 13 our premium staple business.
I talked about that we have seen strong volume recovery in this business. Some of the key elements which are driving this shift One is we have taken a position that we would play this portfolio as one where we could we would want to at least protect and drive our volume efficiency and in that context we had done some smart new price point based packs. So historically we are the premium player on a per unit price basis. We did launch some new Grammage lower Grammage price point parity packs in quarter three in both our Superlight and also in our franchise and those have started to shape very well for us in the business.
We are also looking at distribution gaps in this business. In some places because of our premium positioning we had lost out on distribution. So there is a renewed focus on distribution expansion on this portfolio which is also helping us in the area of entire E commerce portfolio where we are now investing also on edible oil. So historically we were not really investing on E commerce portfolio. We are now specifically investing on this business and that is also helping us grow back this business.
In addition to that we are also building our other play in this business. So you would be aware we also have oats business sitting under Sundrop and also have breakfast pizza business sitting in Sundrop brand. Both of these business are seeing increasing traction. We are using E commerce and Modern grade as a channel to drive our growth and we are seeing this business also shaping up strongly in the emerging channels. Some new launches in this category in Kodakur we launched a masala roach with millets as a new category as a new play in this oats business.
Similarly in sweet size which is high protein segment of oats, we launched a high protein chocolate oats in quarter four. So these are new introductions which should also help us expand our franchise and growth on the SAMs entire food platform of Samdrop business. Moving on to Samdrop peanut butter, I’m on slide number 14. This business continues to be under pressure in modern trade and E commerce. In our mainstay general trade channel this business continues to do well and is growing in let’s say no single business but close to 7 odd percent.
It is growing even in the general trade channel but we are losing share in modern trade and E commerce. What we have started to make shifts around is we are doing increasing innovation focus in this category. This category has seen emergence of high protein variants in quarter three and quarter four. We did launch especially during quarter three we launched seven new variants in this which we have started to expand presence and investments in quarter four of this year and our focus would be to really build our business by expanding both distribution and also throughput from the channel for these innovations which help us gain share back in the high protein segment and also in some of the areas where consumers are looking at bulk packs, big packs at a more efficient price.
Point. So those are the two segments we are specifically targeting for peanut butter. And this would continue into going quarter. And we are very strongly confident on making shifts in this business in the period ahead. I’m now Moving to slide 15 which is on the Del Monte ketchups and Mayo portfolio. This business of course sits in both B2C retail side and also on the B2B side. Palumbarni is of course the biggest category of Delbante as a business. We had a very strong year. We grew up almost like 11% in this business, fundamentally driven by very strong volume growth of this category.
So we are still in the face of, I would say expanding, gaining share in this category. And we are focused on strong volume growth. And that is reflecting in a very strong performance both in volume and value in the year for this business. And this business has grown across channels. So it’s a holistic growth across food services, organized retail, across E commerce and also exports food service also. We had of course some new customer acquisitions and some line extensions in the Mayo portfolio. We also have an export business sitting in Middle east where we supply some of our culinary products to key accounts and like Pizarros, et cetera.
And that business also has been growing strongly for us overall. If I look at this business tenets, we will continue to drive volume growth through a combination of expanding this business in both B2C and B2B sites and also continue to do innovation. So our focus on the period ahead will be to also bring in new and grow in some of the additional franchises within the Mayo side of business where we did some new batch introduction at a mass price point. And these price points would help us get better distribution, deeper distribution and accelerated growth for our business.
I’m now moving on to slide number 16 on the Italian business for Del Monte. This is a combination of are olive oil pasta dominantly. These are the two main categories. We also have of course dried olives in this category. This business, as I talked about olive oil has been significant on the commodity side. The prices of olive oil had come down significantly. We did pass on the benefit of price reduction the cost reductions to consumer while maintaining our margin. So our margin profile has been consistent and stable on the business.
These price reductions were purely in line of competitive intensity. We did pass on to the consumers maintaining our margin. Outcome of that is we have had a very strong volume growth. And intrinsically, as I talked about, we are driven on driving volume in this category because all of these categories were well, Monte Place are fairly high growth potential categories per se. And also even from share perspective, in some of the categories like Kalimari, we have a significant headroom for growth.
So our volumes responded very strongly. Though on the value front we have a year where value growth was negative. But fundamentally the premise is to grow volume in this business and that has been delivered very strongly. Pasta business also grew by strong 11% in volume terms. Again on the back of food service and E commerce business, which is of course an emerging category, we are seeing accelerating consumer tractions and hence E commerce business will be very pivotal for driving accelerated growth in this business.
Moving on to slide number 17, E Commerce we are focusing very, very strongly. If you look at this channel is seeing increasing traction especially with the strong growth we are experiencing in quick commerce side, that business has grown by close to 35%. We also need to factor in that in this 35% growth. Again we have the olive oil business and a large part of olive oil business does come from E commerce and big commerce channels where we have a value decline. So if I actually take out the value decline, the growth of this business will be much larger or in excess of.
What we have also started to do is use E commerce increasingly as a platform for driving our new categories where we have significant headroom for growth. I talked about the entire ready to eat popcorn business, how E commerce is playing. Similarly in Belmonte portfolio, pasta is playing very strongly. We do have a breakfast season play and the thumbs up again. That and play notes on the sensor. Both of them are being increasingly leveraged to get a better foothold in the category. And our experience is very strong in the last few years where we have seen accelerated growth and very strong growth in new emerging categories.
What it sets for us is it establishes as in new categories where we can then play increasingly in the rest of the channel which is modern trade and general trade. Once we establish the base of this business in E commerce. Moving to slide number 18. This is on the marketing spend side. I had talked about it that on the face of it quarter four looks like that there is a reduction in marketing spend. But what I would want to call out is there is a reclassification of visibility spends of close to 6 per year in a single quarter, which is actually for the full year.
We are doing the reclassification in line with the guidance we have from ISC on how to treat visibility spends in trade. So that reclassification has been done in a single quarter. If I remove the quarter the other quarter impact which is actually getting reclassified. We actually had a flat marketing investment and at the base of the organization in quarter 4, we still have a very strong marketing investment overall for the full year. Of course we have increased our marketing investments by close to 16%, close to 18%.
And that has been also driving our growth in core categories where we are investing strongly. Another area, I have talked about it earlier, also on slide number 19 is entire Salesforce automation which we are doing in in Sandra Brands, Sundrop Brands we are aware covers almost like 475,000 outlets directly through a combination of our own dedicated field force which covers about 375,000 outlets and also shared field force shipping through our distributor network which also covers another 100,000 outlets.
So this entire dedicated field force which is exclusively covering retail for us, we have brought this entire field post on a bizon platform where we have entire mobile enabled ordering and sell ins to the trade, plus also tracking availability, et cetera. So entire retail execution is now being tracked on a mobile app and being delivered on a mobile interface. I’m very happy to state that we have been able to bring entire dedicated coverage with which we have now on this app. What it means for the organization is now we are building a much stronger visibility of our high throughput outlets, much stronger visibility of line sold per outlet, stronger visibility of frequency of range we sell in each other.
And this is really going to be next phase of us where this intelligence will be used in two ways. One is how do we expand the productivity of our entire field organization. And second, given that we have two organizations, SunBathe and Del Monte, and today both of them are on the same mobile interface, same platform, we are also creating an opportunity to have an optimized coverage for outlets which are no throughput while still having a dedicated coverage for outlets with high temperature. This will really pave way in two ways for us in the year ahead where we start having a more optimized coverage and also expanding the efficiency or throughput from the outlets where we currently get certain businesses.
Moving on to slide number 20, we have been talking through the years gone by that there is a very very high focus on ensuring that we have much stronger margin profile in the business. So we have looked at all our costs very strongly through the year. We also worked with some external partners over quarter two and quarter three and all of those programs led both internally and also through external partners have helped us deliver significant improvement in our margins driven primarily in the area of manufacturing costs and logistics.
So if I look at a full year we have delivered close to 300 basis points improvement. If I look at quarter four which is close to about 421 basis points improvement. So sequentially also we have moved up in margin. What you may notice here is that material margins improvement has come down in Guadalupe. This is primarily because we did see inflation in edible oils in quarter four and that has impacted material margin slightly adversely. But we have of course passed on those increases to consumers.
So this is only a transient impact. Going forward you will see the margin improvements coming back because all of those have been passed on to the consumers in the period of end of March to April. Moving on to slide number 21 we have a significantly high focus now on innovation. We did almost like 70 plus launches in the last year and these have given almost like a 4% of overall sales for us. We are seeing very strong traction on new products as a future source of growth for the organization. Next two slides team are on reported financials because they are not comparable.
I move straight to slide number 24 which is comparable financials where we have taken Del Monte financials for the full year for the full quarter and full year for a like to like comparison. You will recall our Del Monte business was integrated into consolidated into reporting firm sun drop only from February 2025 and hence reported financials are not comparable. But what you see on slide 24 is our performance for the quarter. So very clearly growth strong momentum, 11% growth margins. I talked about more or less very similar margin profile at a material cost level but significantly enhanced margin profile by taking a very strong improvement in our other expenses which is where our manufacturing and logistics expenses and also our SBN predominantly sits advertising have already called out while it shows negative but on a real basis it is flat investment and it is close to about 91 crore investments we have done in this quarter for building our brand.
So our investment profile remains at about 5% to 6% of top line in the business as an outcome of this ebitda. I would I’m happy to share that taking out the one off expenses which is around in this quarter which is primarily around wage code bill and also the ESOP expense which continues into this quarter. Also our EBITDA is at 7.2% significant improvement from last year absolute number also again a significant improvement from last year and also this is something which you could see as a stable base we have built now for the organization today.
So I would say 7% is let’s say a new base which the organization is coming towards. If I do the same assessment on slide 25 on slide 25 for the full year level we have of course grown 10% on top line. Our margin as I talked about for the full year standard about 5.7% of EBITDA and our advertisement in expenses has been 18% growth over last year. So clearly as I speak about these numbers, we have seen consistent improvement in our margin profile as we have moved through the year with the exit qualifold numbers sitting close to 7% of EBITDA for the organization.
And now on last slide, slide number 26. It’s a quick recap of why this portfolio is very attractive. I’m just summarizing it for all of us. One of those very strong brands play in a food business which is very attractive, high growth business. There are all consumer megatrends which are driving the consumption of packaged foods in the country. We of course have very strong treats, very strong brands which can which play in the high margin, high growth category. And we do have a very strong headroom for growth, both even in terms of expansion of the category where we occupy a leadership position and also in the area of share gain in categories where we do have a very strong brand, very high quality product.
But today the share is much lower and hence a significant headroom for share gains. And we would do this through investing ahead of call on media and also making sure that we leverage the complementarity of the two set of organizations which is send up and Belmonte from both our sales or channel footprint point of view and also leveraging our manufacturing and procurement strength to drive efficiency on the business. So that’s it from my side and I’m now handing it back to the team so that we can have question and answers from all of us.
Thank you so much.
Questions and Answers:
Operator
Thank you very much. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Shirish Pardesi from Motilal Oswal.
Please proceed with your question.
Shirish
Hi sir, good afternoon and thank you for the opportunity. Sir, I have three questions starting first question. Over one year we have done the integration of two businesses. So this 10% growth, what we have got, what is the journey today? Have we completed the entire integration? Because we were saying that the two businesses are completely different but they complement in terms of B2B and in terms of B2C. So what benefits we have extracted and what is the strategy going forward?
Nitish Bajaj
Okay, any other question also? Suresh?
Shirish
Yeah, my second question is on the popcorn. I think the growth in ready to eat is humongous. So I just wanted to check upon two three things. What is the distribution of RT ready to eat? And in the overall popcorn business, what is the contribution of ready to eat? Of course flavor strategy has worked, but what else can happen in this category? And third, and on the margin front now we have stabilized. But I think there is also an angle that 5% GST rationalization has happened. The industry has got lot of tailwind, but similarly we have palm oil which is rising and there is a packaging cost because in a small package the packaging cost is much higher.
I would assume that it would be about 10, 11% for us as a percentage of sales. So if these two three cost items are going to go up, what is the strategy to maintain or improve the margin?
Nitish Bajaj
Sure. Right. Thank you Shamish. I’ll go one by one. I’ll start with the first question which is on integration. Right now in the last full year of journey as a consolidated organization, we have focused on getting efficiencies on the business on a standard basis. We have not really done any integration of the business. Only marginal movements have happened. I can talk about some of this, but at a fundamental level the two companies continue to operate independently. The area where we have started doing integration one is in the back end of CFA network.
The two organizations ride on and that’s one area we have has been done. Second, we also did one experiment which started reading in quarter four where we started leveraging sundrop wider distribution breach for using for driving the distribution of Ben Monte ketchup and culinary mayo business in the general trade. So these are the early signs which you have seen right now if the organization continue to operate independently. Where we have been able to drive efficiency is purely on the area of standalone.
The way the organization had our manufacturing footprint. We were seeing increased scale of business of course in some areas, but our cost structures were not sufficiently challenged. So we have done a significant assessment of our manufacturing costs. How do we improve our line efficiency, how do we do better production plannings, etc. And each of them has driven our efficiency. Similarly, when it comes to selling our end consumer which is through a network of cfa, how do we improve our freight costs through use of reverse auctions, et cetera, there have been significant work done on those areas and that is what is driving improvement in efficiency on margins of close to 4% for the business growth you asked me about.
So as of now, these growths are dominantly standalone growths of two businesses because using each other’s strength has not yet happened. I also talked about the fact that we did our entire sales field force on bizomab. This is a very critical pillar for us to get into a journey of leveraging distribution strength of two organizations without creating any kind of integration losses. So today we are in a place where we are starting to understand the entire coverage of two organizations and be able to compare them because the entire field force today is on a mobile app and we have an outlet by outlet understanding being developed for what is the potential of each outlet in each of the businesses.
This is what will pave way for us to decide on a very optimal coverage strategy for the organization. This will come, I would say in the year two years ahead where we leverage some complementarities and say how do we do coverage of our network more efficiently? And this would happen in next second question. I’ll let Ashish answer. I’ll move on to third question which is on the GST rationalization. So GST rationalization. We are aware the entire benefits was passed on to the consumers. So like any no organization when GST benefits were announced we had either to increase damages or reduce prices given the benefits to the consumers.
In the period of course in the last two months we have seen inflation in edible oils. We have seen inflation in packaging costs. Again those increases we have passed out to the consumers very similarly either through price increases or damage reductions. So at a fundamental level our margin profile does remain stable as we stand today. We are in to a larger question. If this continues as a trajectory, how do we see so clearly the organization focus is on driving upselling also in our core parks.
So in Ready to Cook business for example, we talked about how we are looking at a 20 and a 30 rupees price point which is what we are now focusing to expand. And today that has become close to about 6% of our business. So there is clearly a place to say how do we also upgrade upsell consumers? Similarly IT business we are driving big tag growth through E commerce with commerce which is what is also driving impulse consumption without necessarily being a price point of rupee 10 which is more around a very small which is more around a small outlet strategy.
So we are playing the hybrid strategy to make sure that we do build a profile of business where we have a play of bigger pack sizes at a much higher level. And that is what gives us confidence that our Market will be stable in period accounts.
Asheesh Kumar Sharma
Shirish, thank you for the question. So as you rightly mentioned, active popcorn is now overall bigger than a 400 crore brand at an exchange rate and the brand has been growing at about 18%. As we had mentioned, the contribution between ready to eat and ready to cook is now about 1/3 2/3. It’s about 34%, 66% for a popcorn business. Which means RTE from Value Wise is about 34% of business and RTC is about 66% close to that. Now we continue to follow what we have always one, we will keep looking at appearing the consumers to bigger packs both on RPC and rte.
In both these cases, for example, in RTE which is out of home consumption, the convenience channel of quick commerce is what is driving our growth. And bigger packs, we are almost growing in bigger packs as compared to smaller packs by almost 10 percentage points faster, which is the fact which is doing a margin expansion. Now the saliency that we built for brand for our distribution reach is through the 10 rupee packs and that continues even in RTC. So RTC 20 and 30 rupee price points were run which are now contributing sufficiently to our total contribution.
And that’s a graduate general. So both in home, out of home, two occasions, different channels, bigger pack being focused and new consumer acquisition happening through the 10 degree price point.
Shirish
Okay, okay. Yeah, one follow up. I’m sorry
Operator
To interrupt. Mr. Panelsi may be requested to join the question queue. Sir, we have several participants waiting for their time. Okay.
Shirish
All right. Thank you and all the best.
Operator
Thank you.
Nitish Bajaj
Thank you, Shirish. Thank you so much.
Operator
Before we take the next participant, a reminder to all the participants. Please restrict your questions to two per participant. The next question is from the line of Siddish Deshmukh from IIFL Capital. Please proceed.
Unidentified Participant
Hi sir, this is Percy Pantaki here. My first question is on the merger synergies. Of course we have done well in terms of growing our full year EBITDA this year versus the last year. But now that you sort of had both these businesses under your belt for about 12 months, can you give us a little more granular plan in terms of realizing the merger synergies both in terms of action points, the timelines for the action points and the kind of quantification of cost benefits that can accrue on account of these actions?
Nitish Bajaj
Right. Firstly. Right, because moderator said do we have.
Unidentified Participant
Yeah, I just dialed in through my colleague Siddesh’s line.
Nitish Bajaj
Okay, right. Hi Parsi, good afternoon to you. So yes, see I talked you through how we are going about the journey now. So when we talked about the entire sales enablement, which is a very critical data feed for our integration decision. Second is the entire back end or operations where two organizations are wired differently and we need to bring them on same platform. So the second area of work which is going on as we speak right now is in the ERP integration. Two organizations are operating on different ERPs, but we are now embarking, we have now embarked on a journey to get them on a common erp.
And this we expect to finish in a period of about 12 to 14 months from now. So somewhere in the period of June to August we should be through integration and a common ERP platform for those organizations. I talked about entire intelligence we have built around sales network that we should be able to structify and let’s say build a game plan in another six to nine months from now where we would be able to decide what is the most optimal convert strategy, which in a sense means that leveraging efficiencies in the area of a common organization footprint will dominantly follow in FY28.
So FY27 will continue to be the path of building the entire understanding and building the backbone for organization on which two organizations operate on a single backbone. And FY28 is where the harmonization and some kind of efficiency takeouts will start happening at the full organization level. Having said that, in FY27 we will continue our CFA integration journey. We will continue to leverage strength of complementarity of organization. So if I have to give you a broader viewpoint, one could expect 100bps takeout from the journey in next one year and another 150 to 200bps take out in Germany in FY28, primarily coming through efforts around leveraging organizations strength and complementarity.
Unidentified Participant
That’s very helpful, sir. So while you’ve given sort of idea on the merger synergy benefits on basis point points of sales, my next question focuses more on the total EBITDA margin expansion delivery. Like this year, I think on a merged entity you have delivered 250 basis points plus of EBITDA margin expansion. Should we assume a similar journey for the consolidated entity for the next couple of years in terms of about 200 to 250 basis points margin expansion for each year coming partially through the merger synergies, partially through portfolio rationalization or diversification, partially through leverage of top line growth or any other kind of benefits that might accrue at a total level?
Nitish Bajaj
Yes. So first thing, yes, I would say the range would be between 150 to 235 odd basis points. In that range one would be coming as a management, we will be coming in that range. So somewhere close to 200 that could be a little plus minus, let’s say 25 to 50 bits here or there also possibly, but it never is to get into that.
Unidentified Participant
So. So by this map can we say that by FY29 you will definitely be in a double digit margin territory which is three years from now?
Nitish Bajaj
Yes, that is the intent. Yes,
Unidentified Participant
Understood. Secondly, on the two problem categories, which is the Italian and the spreads, what are, if you can just help me very briefly, what is the problem due to which these categories are declining? What is the solution if at all you have to stem this decline and by when you expect these measures to result in the categories coming back to growth.
Nitish Bajaj
Right. So on Italian I request Abhinav to answer this for you and then Ashish can explain on the stretch side. So Abhidham requesting you to take on this question on the schedule. Abhidham is CEO for Del Monte Coons.
Unidentified Participant
Thanks Sidish. Good afternoon. Okay, so as far as the Italian portfolio is concerned, this is one portfolio where Del Monte today is currently if you look at the overall share, we are roughly the third in the country behind Figaro and Borges. Now addressing the issues around the category which we have faced last year is primarily an account of the deflation on the overall commodity side which has happened. This is completely imported as far as olive oil is concerned. Now that entire price benefit is something that we have passed to the end consumer and therefore in the process there is a value decline that one has seen.
But as Nitish had shared in the presentation earlier, there is roughly about a 17% volume growth that we already seen last year and now I think these price corrections are behind in our base from quarter one onwards and therefore from quarter two onwards like to like we would start seeing healthy value growths. That’s one part of it. On the demand generation side what we’re also doing is there is a fair amount of equity as I said, that the the brand carries on the entire Italian portfolio. We’re going to be launching a fairly massive Italian owned Italian space campaign starting from quarter two which also should bring a lot of demand from this particular category perspective.
So we are very optimistic that things should definitely turn around from quarter two onwards for sure. So this price cut is not at margins or anything like that, right? Sorry, can you repeat the question please? Price cut has not resulted in any margin deterioration, right? No, we have not seen any significant margin deterioration.
Nitish Bajaj
The pricing was largely benefit, it wasn’t a margin reduction.
Asheesh Kumar Sharma
Yeah. On spread. Right. On the peanut butter category. So there are two parts to it. One is that even while we say that there is a 7% decline happening on the overall spreads in the peanut butter business if you split it into the big pack which is more commoditized versus the small consumer pack, we have had a very good growth of double digits in volume and unit terms. In terms of the small pack where we struggled was the entry of low priced competitive players in the commoditized section there.
Our strategy over the last three, four months has been to look for more competitive sourcing. Having done that now we are placed to competitively compete with these people who are eroding their market share on basis of price. So that we have done, we are gradually now filling up the gap and fighting them straight head on in terms of the price at the bigger pack level. So that one part we have fixed it is happening and that’s where we are now starting to see benefit. But it takes a little while because the area that they have occupied, it’s taking a time to get them to vacate it.
That’s one. The second was on the chocolate side of the business which was the fast moving category or the fastest growing in E commerce which we said we have now launched products, seven new products in the segment which is helping us premiumize and start getting share there through the E commerce investment. We believe we will start gaining share there and start growing the category overall. If you look at we have had a margin expansion on peanut butter so the price correction was through better sourcing and not by we did a price cut.
So it had impact on top line but not in terms of margin. So we had a margin expansion by Q2 again this year. We also expect that we will be to start negating the impact of the losses and start gaining volume growth say from quarter two onwards.
Unidentified Participant
Got it. That’s all from me. Thanks and all the best. Thank you.
Operator
Thank you. The next question is from the line of Henil Bagaria from Equicore. Please go ahead with your question.
Unidentified Participant
Thank you for the opportunity sir. So two quick questions. One on papa and peanut butter. On the peanut butter side we’ve launched a few products, I mean in the earlier quarter we launched one in the protein packed and omega 3 and current in the chocolate and the jaggery one. So these products are actually still there in the market by some of our peers like MyFitnessPintel or Altino. So how would you price a product Because I think so on the Q, on the Q3 that we had launched, we had product down, we had priced it a notch below the rp.
So what is the kind of sales fashion that we are seeing there and is there a similar strategy are we going to replicate on the new launches and going forward, do you see our products being a notch lower or do you see something very similar to a peer pricing?
Nitish Bajaj
Okay, so thank you so much for this question. So yes, you’re right. We have seen impact on the size of high protein segment with new players coming in and building the category on the promise of high protein. We have built the gaps, bridged the gaps on that side and launched these products in Podaki and they have been in the stage of listing. So generally to get an initial traction and initial momentum, even if you look at players like My Fitness and Pinpoda, which you mentioned, they do give some kind of discounting.
We have also given that to build some kind of initial momentum in trials. The entire focus is to get a trial. Our product is very competitive. Our product is actually a shade better, I would say in terms of protein delivery versus competition. So we have also tried to improve the product profile in terms of protein delivery, et cetera. And what you see today right now is possibly more to get initial trials and entry of consumers into our brand promise of high protein. We were never in the position or space of high protein historically.
We were always in the position of family tablespace consumption as a strength and immunity builder. So getting into the protein segment we are giving some kind of incentives for trials, but this will be primarily to get trials into the category. Our larger play would be to ensure that this category remains or retains the premiumness which consumers are today willing to pay. So it’s more a transient strategy, not a longer term play to play in that dimension. And of course there are media investments, both in digital media and also on performance marketing investments on the channel which are going behind this portfolio to make sure that we also attract newer users and also of course the current protein users in the category
Unidentified Participant
On the popcorn side we’ve got a range from 10 to 60 bucks with average about 30, 35 rupees. And you said that that is actually bound to go up as the larger packs increase. So since we have also launched the caramel blue and the cheese flavor that is to compete with some of our peers in the in the market which obviously sells at a higher price even there we are downward priced. I probably that is because we are it’s an introductory range so how do you see the number of the average price that is that will go up from 3035 to.
I mean what number when you are aiming at a double digit margin. And also if you could also mention some things about the Snacko brand because we could leverage a lot of things out there in the gate pretty especially the peanut butter which is a very saturated market. We can get into peanut snacks which we do have, but more on the peanut energy bar or high protein bar or something of that sort. If you could also give a macro overview of this. And in this entire gamut, how do you see the QCE mix with the GT going forward?
And in the marketing spends, how do you see the marginal spend towards new brand initiatives and new product initiatives?
Nitish Bajaj
Yes. So I’ll just add a flavor to your comments on popcorn. See popcorn we have, we actually enjoy much better margins on bigger bags. So today while you may see on certain packs we see more appear lower than competition. But clearly our valuation in margin from the price points where we are today prevailing also is very very strong. Our entire focus honestly is on building the category we are today as a popcorn player. We are doing a fair pricing of course bigger pack, as I said enjoy bigger margins also.
But endeavor is to really drive on the consumption of popcorn categories. So we are really looking at I see popcorn as a category building thought and not necessarily as a thought to say can I take the price ladder up? We will take the price ladder up by launching newer variants and newer products. So in our period ahead you will see more innovative flavors and offering coming in, some of which will also take the price table up for us. As a business we are not really competitively benchmarking because our leadership position is fairly dominant in this category.
Our thinking is driven by expanding categories and really looking at competition which is operating in pockets really not a mass player or a mass competition or a widespread competition. For us, competition is dominantly pocket led play for us category is omnichannel player and we would play the omnichannel game in this where we keep of course building distribution, building trials and also upgrading consumers through more attractive newer flavors and bonnets. On your question on protein again, right, Sorry, could you just quickly repeat that question for me
Unidentified Participant
With the focus of protein in peanut butter segment. So there are some white spaces which we are trying to fill. We also have a brand called Snacko. It’s not being featured the presentation, but it’s still there. It’s like where it’s a guilt free brand where we are focused on no GI Big Pop etc. So out there do we plan to get more into more into products like on the energy bar segment? Because we’ve also seen a lot of MN in the market where brands are focusing there just trying to get the protein and the entire whole foods into the play.
Nitish Bajaj
So SA our biggest strategy is to build three core brands which is Actu, Sundrop and Del Monte. Building another brand into let’s say contiguous category is not the thought on which we will play. If we have to build contiguous categories, some of which you mentioned are attractive categories for us also we would when we decide to build those categories we would build them more through the current set of brand play than really getting into a completely new brand. Unless of course some of those can be done through an extension.
For example, when you look at Pops Rail which is sitting in our breakfast cereal, it is Sundrop Pops and Sundrop is more an assurance or a mother brand play versus Pops is more a so you will see that kind of play coming in where we have the equity of mother brand giving the trust to consumers to try it out while a sub brand or a variant may come in as a relevant proposition for that category. So that’s the play we will play. But some of the categories which you mentioned, they are attractive categories.
Business as we go into our journey of expanding businesses and getting into newer products, some of them will feature in our innovation game plan. Today we are focused around the core and building innovations around the core. But you will see some of these also coming in due course of Next let’s say 18 to 24 months. I don’t want to divide any further.
Unidentified Participant
Lastly on the marketing spends, how do you see it shaping up on especially the marginal marketing spends on the new brands? And
Nitish Bajaj
See we are playing the entire our entire strategy is to expand margin and deploy at least 50% of them back to drive growth. So we are playing the strategy of profitable growth. We intrinsically understand and believe that marketing spend will be very critical for accelerating the growth. Our ambition will be to grow at least 4 to 5% higher than where we today are. And today we are reaching to about 5 to 6% of spends. In a longer play I would want to be sitting at around 8% to 9% of spends. Of course when I look at on the relevant category portfolio where we spend, this will become a double digit spend from the portfolio where we spend perspective and that to me is a direction on which I would want to go.
So we would create margin expansions going forward, deploy a reasonably large part, maybe 40% to 60% range of that margin expansion back to acquiring consumers and back to growing or accelerating our growth from this. So that’s the play you would see from us as a business. So you would see marketing growing ahead of our top line growth and potentially over next two years get to around 8% of top line as an organization. While on the categories where we invest, it may be sitting in a double digit number.
Unidentified Participant
Thanks a lot to the party. So I’ll fall back to the. Sorry
Operator
To interrupt. Mr. Henil may be requested to join the question queue, sir. We have several people waiting for their turn.
Nitish Bajaj
Yeah, thank you so much. Yeah, thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraint, we are taking the last question for today from the line of Pritesh Chera from Lucky Investor. Please proceed with your questions, sir.
Shirish
Yes, sir, My question is on the differential growth and gross margin between the core categories and the non core categories. So where you identify core categories at 65% of the business and from your presentation of like to like 10% growth. Right. When you. There’s one slide where you have given Del Monte is fully a number and you know there’s a 10% growth. So is it possible to just give some indication on the core category or non core category growth? Yes.
Nitish Bajaj
So aggregate. Yeah. So broadly I will say if you look at most of our core categories or. Sorry, all of our core categories are sitting in food as a, as a platform. And one of our large categories which we haven’t called out in the code, which is edible oil, which is sitting in a space which is commodity in nature. Right. So if I look at our margin profile of our food business, our gross margin profile will be close to around 25% as an organization and foods will be about 4 to 5% higher and edible oil will be about 5 to 7 to 8% lower than that.
That’s the way to look at it. In foods we also have some categories which are not core, but margin is not very differential. Margin is still in the range of 28 to 30% range in most of the categories there.
Shirish
So you said that from the gross margin perspective, company level is 25%, food is 30 and edible oil is 20. Right. That’s how I have to write. Read it.
Nitish Bajaj
Yes. Yeah. And just as a clarification, our gross margin definition excludes, basically it excludes material cost, it excludes manufacturing costs, and it includes freight and logistics also.
Shirish
Okay. And on the growth side, aggregate core categories, which is 65% of your business would have grown at what rate in value and volume.
Nitish Bajaj
So this year our Growth on core categories will be about 12 to 13%. Why it’s not very different, let’s say is because oil has also done reasonably strongly this year. Though of course, oil growth was dominantly a price growth. Except of course in quarter four where we have also seen strong volume growth in the edible oil business.
Shirish
And this 12, 13% value and volume will be how much in that.
Nitish Bajaj
So I think each category has a different volume profile. We had given the flavor of what we value in each. So that you have in the data which you have already shared.
Shirish
Okay.
Nitish Bajaj
8 to 15% volume growth between various categories. Hello. Yes, we. Yeah,
Shirish
This answers my question, sir. Thank you very much.
Nitish Bajaj
Thank you so much. Thank you.
Unidentified Participant
Thank you.
Nitish Bajaj
Sorry. If there are any more questions, I would request participants can reach out to Kavita, our company secretary. And we would be happy to get back to you with our answers. We understand on paucity of time, we may not be able to take all the questions today. But thank you all for being there. And any further questions, please do reach out to us, our company secretary. We’d be happy to engage and answer your questions.
Operator
Thank you, sir. On behalf of Anand Rathi shares and stock brokers, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Nitish Bajaj
Thank you all. Thank you so much.