Coke to Colgate: Global companies see uneven India growth
Consumer confidence is soft and growth has somewhat sputtered - this was the broad market outlook, called out by CEOs of global consumer giants in recent earnings.
Dirk Van De Put, chair and CEO at Mondelez International, maker of Cadbury chocolates, said that in emerging markets such as India, Brazil and Mexico, consumers are "worried" about their personal finances and job security even as the firm gained market share in India during the quarter.
"Consumer confidence is softer in these markets...but emerging markets continue to be an attractive growth engine for us," Put said.
For Colgate-Palmolive, India has rather had a tough quarter on the back of "sluggishness in the urban class of trade." CEO Noel Wallace has the job cut out for the India team - getting the urban markets right and executing more effectively there.
The company, Wallace said, is relaunching the Colgate Total line in the market, focusing on entry price points and ramping up premiumisation.
"We're not pleased really with the performance we had in India, but we feel good about where we're headed in the back half (later part of the year). We have some higher-end premium innovation coming through the back half and into 2026," Wallace told investors. Colgate is also addressing the Rs 10 price point in India, the CEO said.
The Indian unit of the company reported a YoY drop in net sales and profits in Q1.
Consumption in urban markets had been sluggish over the past several quarters; there have been some signs of recovery but all companies are yet to see a full revival across urban regions.
Even as tax breaks, lower food inflation, and interest rates have put some money in the hands of consumers, recovery has been only gradual and urban continues to lag rural markets. Job uncertainties and layoffs in the IT sector, which employs a large share of the middle class, pose fresh challenge for the sector, risking a slowdown of the revival process. Beverage giants Coca-Cola and PepsiCo felt the heat of short summers in June quarter.
Coke's consolidated unit case volume declined 1%, weighed down by declines in India where a brief border tension with Pakistan also impacted consumer sentiment, alongside Mexico and Thailand. PepsiCo reported a decline in unit volume for its beverage business in India even as the convenient foods business fared well.
P&G said that growth trends in its enterprise (emerging) markets have been varied. While Turkey has returned to a 17% organic sales growth, India is still growing at 5% and Middle East remains challenging.
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