Less to spend, India buys less of daily needs
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Mumbai: Demand for daily groceries, household and personal products worsened to a 2-year low during the March quarter, indicating delayed turnaround for the fast-moving consumer goods sector.Global research firm Kantar said FMCG volume sales growth in the March quarter was 3.5%, slowest since the same period of 2023. A year ago, the market had grown 5.5% during the same quarter. Sales volume in rural markets rose 2.7%, significantly slower than 6.3% a year ago, while demand in cities remained largely unchanged at 4.4% from a year earlier, according to data from the research firm."At the household level, urban areas are driving the growth where smaller local brands are outperforming bigger brands. However, established companies are stronger in the rural markets, but the status quo is expected to continue in the next quarter also. The slower growth last quarter is perhaps indicative of a slower recovery of the FMCG sector ," said K Ramakrishnan, managing director, South Asia, Worldpanel Division.Kantar monitors branded and unorganised products, including unpackaged voluminous commodities and the numbers reflect slower sales across categories and markets in the last many quarters. For most listed companies, urban markets account for anywhere between 50% and 70% of their overall sales and over the past year, inflationary pressures, low wage growth and higher housing rentals weighed on urban demand for daily groceries and staples."Commentary for unlisted players, including Indian subsidiaries of multinational corporations, D2C players, and regional brands indicates a slightly better performance, underscoring broader demand resilience," said Saugata Gupta, managing director at Marico , at an earnings call last week. "Data of some of the D2C and unlisted players does not get captured and the growth could be a tad higher," he said.So far, consumer goods companies have posted mixed volume growth trends. HUL posted a 2% volume growth, while Godrej Consumer Products (GCPL) volume was slightly higher at 4%. Tata Consumer's volume rose about 6% and Marico saw a 7% volume growth during the March quarter.While companies have flagged a softness in demand amid shrinking household budgets, most of them predicted a strong recovery in this fiscal year. GCPL managing director Sudhir Sitapati said he was bullish about consumer demand over the next 12 months."El Nino impacts food prices in India, and food inflation immediately has an impact on FMCG consumption. So now that El Nino has reversed, price inflation has come down in January, February, March, and we should see some kind of demand coming back," said Sitapati, adding income tax reduction and government's welfare schemes over the last year will start to bear fruit.The market grew 4.2% in FY25, slower than 6.6% in FY24. While personal care has held on to its growth levels at 4.6%, food and beverages slowed significantly, down from a growth of 7.8% in FY24 to just 4.4% last fiscal as sales of categories such as atta, biscuits and salty snacks slowed down sharply in the year."Urban demand is compressed, but recently, we have started to see rural areas being quite robust, especially in the north-central and eastern regions. And with the expectation of a good monsoon and a good crop, there's clearly more positivity in the rural areas. We feel the macro situation is going to move more towards consumption, and consumption will start to play a greater part in the next few years of GDP growth," Rohit Jawa, MD at HUL, told ET last month.
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