CavinKare forays into men’s grooming segment; to offer head-to-toe solutions

Source: Economic Times, 21 September 2021

Fast Moving Consumer Goods major CavinKare on Tuesday forayed into the men’s grooming category by launching “BIKER’s” brand and unveiled a slew of products under its initiative, a top company official said. “This foray into the men’s grooming category, which is expected to cross $1.2 billion by 2024, marks a significant step in the CavinKare 2.0 growth strategy. The pandemic has opened many opportunities for all industries, but it has been a game changer for the beauty and hygiene category”, CavinKare Director (FMCG) and CEO, Venkatesh Vijayaraghavan said.

He said the company has witnessed an increased interest among the ‘urban’ male consumers for personal grooming products. “Hence we have used our strength, Research and Development, to develop an entire product line specifically curated to match the needs of urban male consumers”, he said in a press release.

Under the BIKER’S brand, the company launched 2-in-1 shampoo conditioners, beard oil, beard cream and shower gel to satiate the needs of the urban male.

“With an avid interest from men towards personal grooming products, the brand will offer head-to-toe solutions for all the damages caused due to long commute and stress”, it said.

Enriched with the goodness of ingredients like Moringa leaves, Aloe Vera and more, the products offer holistic care and nourishment as well, the company said.

Announcing the launch on Tuesday, the company unveiled its first range of products in the shampoo category, which will hit the markets in Tamil Nadu from today.

The BIKER’s Shampoo would be available in three variants — Helmet damage repair, anti-dandruff and strong and bouncy shampoos which would be priced between Rs 80 and Rs 415.

The bottle has been designed like a motorcycle handlebar to resonate the target consumer and product would be available across retail outlets, kirana stores and select e-commerce portals.

Under its 2.0 growth strategy, CavinKare has drawn up aggressive expansion plans, besides planning to garner group revenues of Rs 5,000 crore in 3-5 years.

Amway plans to invest Rs 170 crore over the next two to three years in India

Source: Economic Times June 13, 2021

Direct selling FMCG firm Amway India plans to invest Rs 170 crore in the next 2-3 years in the country to boost research and development (R&D), manufacturing automation and innovation. The company also plans to strengthen its nutrition portfolio, which accounts for over 60 per cent of its revenue, by exploring adjacent and expanded spaces around the nutrition segment.

“Amway has earmarked an investment of Rs 170 crore for the next 2-3 years in India.

“This amount will be used to boost R&D, manufacturing automation, innovation and science, and home delivery as well as to strengthen our digital capabilities to ensure efficient functioning,” Amway India CEO Anshu Budhraja told .

Budhraja said that moving forward in 2021, Amway’s growth will be fuelled by key levers that include increasing awareness around nutrition and immunity, accelerated digital adoption and a robust supply chain with seamless last-mile delivery.

“The year 2021 will witness a strong pipeline of innovative product launches including an advanced version of the foundation range of supplements, newer formats of products that are more engaging and appealing to youth and much more.

“We will further strengthen the segment with a huge focus on the herbal category, while also developing affordable herbal nutrition supplementation,” he added.

Amway India’s nutrition portfolio registered a double-digit growth contributing over 61 per cent to the company’s business revenue in 2020. Out of the total 140 products in India, Amway has about 42 products in the nutrition portfolio.

“With continued demand for nutrition and immunity supplements, we are expanding our nutrition portfolio catering to the evolving consumer demands.

“We are looking at multiple innovative solutions such as strengthening the existing portfolio, developing new products in the traditional herb’s category, looking at options in affordable supplementation space and new formats,” Budhraja said.

The company is also exploring adjacent and expanded spaces around the nutrition segment.

Recently, Amway India launched Nutrilite Vitamin C Cherry Plus tablets, intended for people with weakened immunity.

Earlier this year, Amway India also made a foray into a new category with the launch of Chyawanprash by Nutrilite to strengthen the immunity supporting portfolio.

Budhraja said that this year, Amway India will also focus on developing affordable traditional herbs nutrition solutions and expanding the kid’s nutrition portfolio.

“We are working towards strategic partnerships with leading brands aiming to offer the best of products and solutions to its discerning consumers like the strategic partnership the company entered with ITC in 2020,” he added.

In 2020, ITC and Amway India entered into a strategic partnership to jointly distribute a range of products in the health and immunity-boosting space.

FMCG industry record 9.4% growth in Jan-March, rural continue to perform and metro cities recover

Source: Retail Economic Times, May 12, 2021

New Delhi, The Indian FMCG industry has recorded a 9.4 per cent growth in the January-March quarter of 2021, helped by a consumption-led growth and value growth by increased prices of products, especially of staples, said data analytics firm Nielsen. The rural market continued to perform with strong growth of 14.6 per cent during the period and the metro markets have registered a positive growth after two quarters.

Fast Moving Consumer Goods (FMCG) industry sales growth from the traditional trade channels jumped to double digits, while growth in e-commerce normalised down to single digits in the January-March quarter.

“FMCG industry in India has built growth momentum by growing at 9.4 per cent in the quarter ending March 2021 after growing at 7.3 per cent in the previous quarter (October-December 2020), over the same quarter of the previous year,” said FMCG Snapshot for Q1 2021 released by NielsenIQ’s Retail Intelligence team.

Commenting on it, NielsenIQ South Asia Lead Diptanshu Ray said: “This is backed up by staples, essential non-foods and indulgence categories.”

However, he also cautions that the beginning of the second quarter may bring some new dimensions, as the situation is dynamic across the country.

“Now that lockdowns have resurfaced, and with last-mile delivery boost up, the e-commerce channel will continue to be dynamic,” it said.

According to the report, the metro cities have registered a positive growth of 2.2 per cent in the January-March quarter after two-quarters of the declining trend versus the year-ago period.

“Rural markets continue to further build on the growth momentum – growing at 14.6 per cent in the Mar quarter after a 14.2 per cent growth it posted in the Dec quarter,” it said.

Moreover, Nielsen expects a good expected monsoon this season, making it the third consecutive year of rural rejoice.

This had a boost up effect on the earnings of agrarian households and kept rural sentiments upbeat.

Besides, rural centric schemes as bigger outlay for MGNREGA, rise in wages and increase in MSP of key crops have been instrumental in keeping FMCG consumption in rural markets buoyant.

“We also saw the Large and medium-sized companies bouncing back in Rural India,” it added.

While talking about the consumption growth during the January-March quarter, Nielsen said it was uniform for both foods and non-foods

Foods basket got a boost from the pricing uptick – mainly in staples categories like Edible Oils and Packaged Tea.

Consumption growth witnessed for certain categories in non-staple Foods categories as well such as Biscuits, CoffeeCheese, Ketchup because of increased in-home consumption.

“There are green shoots of personal care categories’ growth coming back while Snacking and Impulse Foods basket maintained growth trajectory,” it said.

On the other hand, the Non-Foods categories basket saw a dip in average pricing.

“This is due to the increased contribution of larger packs in the consumer basket and rise in consumer promotions in Essential Home Care and Personal Care categories,” it said. 

Asked about big foreign firms which have made investments in India in the past year, the commerce and industry minister said Apple and Samsung have invested on a large scale in the country and expanded their facilities.

Referring to the two firms, he said: “I believe they are looking at India as their prime production base to meet the needs of the world.”

He added that pharma companies are also looking at expanding their investments in India.

The minister also expressed confidence that going forward, India will be able to overtake China in its engagement with Bangladesh.

His statement comes at a time when Prime Minister Narendra Modi is visiting Bangladesh.

The Prime Minister left for Bangladesh on Friday on a two-day visit during which he will take part in a wide range of programmes aimed at furthering cooperation between the two countries.

Goyal further said it will be a “record year” in terms of FDI inflows for India, despite the pandemic and “the fact that all international statistics suggest that foreign investments across the world are going to significantly fall in the current months.”


Observing that India was amongst the “rare countries” which saw FDI growth in 2020, the minister said he has “absolutely no doubt it will be a record FDI”.

Asked about India’s relations with Bangladesh vis-a-vis Bangladesh-China ties, he said India has been working relentlessly to build strong relations with all its neighbouring countries.

Goyal said India’s ability to add more value to the products and services has helped it expand trade ties with countries like Bangladesh.

“I have the confidence that going forward, we will be in a position to overtake China in their engagement with Bangladesh. We are working with that single-minded purpose and our industry has the ability,” said the minister.

He said India’s services sector has the confidence, adding that “we in government are also proposing several initiatives, some of which should be discussed during PM Modi’s visit to Bangladesh.”

However, he added that India does not hold a grudge against any country for its engagement with anybody else and focuses only on what it can do with that country better.

Goyal, who is also the railways and consumer affairs minister, said the Indian Railways has seen the highest freight loading in its history every month since September 2020 till February 2021.

“When we close March 2021, despite the setback of first few months of the lockdown, we will be exceeding last year’s loading in the Indian Railways in terms of freight and it will be the highest freight loading that Indian Railways has seen in its long history,” he said.

On the Bharat Bandh called by farmers” organisations on Friday to protest against the three farm laws, which included train blockade, Goyal said he has been monitoring the situation and in the last report sent to him, he saw that in the whole country some 60 odd trains were disrupted for 5 to 15 minutes.

The minister said this clearly shows that “farmers across the country are happy with these laws”, adding that the three farm laws do not take away anything from what was already existing and they are an added option given to the farming community. Asked about the ‘TRP scam’, Goyal said the investigation will bring to light any wrongdoing and stringent action will be taken against the guilty.

Nielsen predicts revival of FMCG growth; some differ as Covid-19 cases rise

Source: Business Standard, Mar 26, 2021

Mumbai: The Rs 4.3-trillion fast-moving consumer goods (FMCG) market in India will revive this calendar year in line with the trend visible across Asia, market researcher NielsenIQ said on Thursday. The prediction was part of a broader outlook the agency released for the Asian region comprising China, India, Korea, Singapore, and Thailand.

India witnessed a nationwide lockdown a year ago, hurting FMCG growth. While the January-March 2020 period saw the market grow 3 per cent, it contracted in April-June, reporting a 19 per cent fall.

Since then, the market mo­ved up, Nielsen said, growing 0.9 per cent in the September quarter and 7.1 per cent in the December quarter. In an update last month, Nielsen said the January-March 2021 period also looked strong.

“2020 was a challenging year with most Asian markets experiencing a decline or lower growth in FMCG. We believe the pace will pick up and normalise this year,” Justin Sargent, president, retail intelligence, NielsenIQ Asia, said.

But some firms differ with this view following a surge in Covid-19 infections in India.

“Certainly, packaged foods and consumer staples will do well in a situation where lockdown curbs will increase because of a second Covid wave,” said Mayank Shah, senior category head, Parle Products. “But discretionary segments will take a hit because the attention of consumers will be on essentials rather than non-essentials. So, FMCG growth is not likely to be even if viewed category-wise.”

This trend was visible last year during the nationwide lockdown when pantry loading increased significantly. At the same time, in-home consumption also rose, pushing up growth of packaged foods and staples. Personal care and out-of-home categories, on the other hand, were hit hard.

Sumit Malhotra, director, Bajaj Consumer Care, said discretionary spending would take a beating. “The focus will be on what is required urgently. So, discretionary spending of any kind will take a backseat.”

According to analysts tracking the domestic FMCG market, categories such as hair oils are beginning to see a weakness in demand as consumers turn their attention to essential items. On Thursday, India crossed 50,000 daily coronavirus cases after five months, setting alarm bells ringing. The widespread nature of the second wave has worried local governments, citizens, and businesses. States such as Maharashtra, Punjab, Madhya Pradesh, Rajasthan, and Kerala have imposed lockdown restrictions in towns apart from the big cities in recent weeks to curb the spread of the disease.

FMCG company executives have admitted they’ve been wa­tching this trend closely, much like their counterparts in the consumer durables industry, since the April-June period is an important quarter for most consumer goods companies.

Nielsen, meanwhile, said there was room for opportunity and growth this year. “Growth can be found in the right stores, right categories, right segments, right occasions, and right price tiers. Dynamics are still uncertain but those who are more agile will be the big winners in 2021,” Sargent said. The market researcher has identified five key trends this year, including convenience, homebound, alternative, natural and blends that will shape the market. According to Nielsen, 62 per cent of Asians in a survey said convenient locations were a top reason to choose where they wished to shop. Around 76 per cent said services should offer more flexible options for lifestyles at home, while 69 per cent Asian consumers would switch to an eco-friendly brand with the same price and quality.

FMCG industry grows 7.3% in Oct-Dec, rural sales up 14.2%: Nielsen

Source: Business Standard, Feb 17, 2021

The FMCG industry in India has recorded a value growth of 7.3 per cent in October-December quarter helped by consumption-led recovery during the festive period and increase in sales from traditional as well as organised trade, according to data analytics firm Nielsen.

The metro market witnessed “significant recovery”, while rural India, which is performing well after a quick recovery from the pandemic, continued to be “buoyant” and witnessed double-digit growth during the quarter under review.

Large manufacturers also bounced back with consumption-led growth during the quarter, while the small ones clocked double-digit growth amid rise in consumption, said the FMCG Snapshot for Q4 2020 released by NielsenIQ’s Retail Intelligence team.

NielsenIQ is a part of global measurement and data analytics company Nielsen.

The Fast Moving Consumer Goods (FMCG) industry in India, saw a bounce back with a growth of 7.3 per cent in the quarter ending December 2020. This growth in Traditional trade (Grocer, Chemist, Paan shops etc.) and Organised Trade (Modern Trade and Ecommerce) was driven by consumption,” it said.

The festive period-led growth uptick in November, was sustained in December also, it added.

In 2020, the FMCG Industry had a value degrowth of 2 per cent.

In October-December quarter, products such as liquid toilet soap, antiseptic liquid, floor cleaner, toilet cleaner in the Hygiene & Immunity building’ categories continued a high-value growth of 46 per cent in comparison to the corresponding quarter.

“The home and personal care’ basket made a consumption-led recovery (5 per cent volume growth vs year ago), while Food categories saw a 10 per cent growth riding on boost in consumption as well as a price increase in some food baskets, it said.

This growth recovery was widespread in the food basket, including Staple Foods’ that grew 18 per cent in the December quarter, vs a year ago.

While the Indian consumer has had a tough year, the last quarter of 2020 has seen a recovery in consumption as economic activities have started moving back to normalcy (opening up).

“The festive season brought a further boost to the sentiments and since then there has been a visible uptick in growth for the industry resulting in an increase in consumption across staples, and home and personal care, said NielsenIQ Lead, Retail Intelligence, India Diptanshu Ray.

The Indian metropolitans, with more than a million population, have come back into the positive growth zone after two-quarters of decline and reported 0.8 per cent growth in October-December quarter.

While, rural markets continued to grow in double digits – accelerating to 14.2 per cent in the October-December quarter, from 10.6 per cent in the July-September quarter.

This sharper recovery is on the back of favourable agricultural sector performance, government action towards rural employment generation, and as rural India had a lesser impact of the pandemic, it added.

Large FMCG manufacturers bounced back with consumption-led growth but small manufacturers, having an annual sales turnover less than Rs 100 crore, continued to exhibit double-digit growth of 16 per cent in the December quarter.

Meanwhile, e-commerce is stabilising at a consumption level higher than pre-COVID. The e-commerce spurt is more prominent in the metros, it said adding that traditional trade channels consolidated its share in the metro markets. Traditional trade channels continued their growth momentum in the December quarter (8 per cent vs year ago), after a 3 per cent growth it clocked in the Sep quarter. Within organised trade, Modern Trade channel has posted a strong recovery to (-) 2 per cent in the December quarter, as against a (-) 15 per cent in September quarter, it added.

Despite production & supply woes, FMCG market growth doubles to 4.2% last year

Source: ETRetail.com, Feb 01, 2021

Mumbai: India’s fast-moving consumer goods (FMCG) market expanded 4.2 per cent in the last calendar year, twice the rate in 2019 despite manufacturing and distribution hurdles in late March and April, helped by the rise in the packaged food and hygiene segments as many Indians stayed home due to Covid.

The market for daily groceries and household products had grown 2.1 per cent by volume in 2019, according to the latest study by global consumer research firm Kantar Worldpanel (formerly IMRB). Volume indicates the unit number of products bought or consumed.

Except for beverages, which declined 3.8 per cent, all other segments —personal care, household and foods — witnessed significantly higher growth during the year.

This rose in successive quarters after gradual reopening of the economy as restrictions were progressively eased.

Colgate global chairman Noel Wallace said he was pleased with the growth rebound that the oral care giant saw in India during the second half of 2020. “Generating 7per cent organic in the third quarter and just shy of 10per cent organic in the fourth, we think is a terrific performance,” Wallace said on an earnings call.

During the December quarter, most companies posted high volume growth. Dabur and Marico posted 18per cent and 15per cent expansion, respectively. HUL volume growth at 4per cent was at a fourquarter high. Kantar said the overall market grew 5.5 per cent during the last quarter, buoyed by rural India’s strong performance, which touched 6.6 per cent, the highest in the past 16 months.

“Rural and personal care continue to be the growth drivers in the latest quarter too,” said K Ramakrishnan, managing director, South Asia, Worldpanel Division. “Even bottled soft drinks start a comeback after being hit severely in Q2 and Q3, an indication that the household behaviour is returning to some sort of past normalcy.”

Since the nationwide lockdown beginning March-end, villages drove overall market growth, outpacing cities, which were severely impacted by the pandemic-induced disruption.

FMCG cos likely to see a robust Q3 as sales revive

Source: LiveMint.com, Jan 15, 2021

India’s fast moving consumer goods (FMCG) companies are expected to report strong December quarter earnings aided by festive sales, improved consumer sentiment, better mobility, and a severe winter that led to people spending beyond staples and cleaning products.

In what may be a turning point for FMCG firms, they could see the strongest top-line growth rate in seven quarters, analysts at Motilal Oswal Institutional Equities said in a 14 January note. “Top-line growth momentum has well and truly returned post the pandemic impact in previous quarters, with cumulative sales for our coverage universe expected to grow 8.5% year-on-year (y-o-y) for 3QFY21. This is the strongest pace of growth estimated since the March 2019 quarter.”

Edelweiss Securities estimates revenues at large consumer goods companies to grow 8.2%, with profit after tax (PAT) growing 4.4% y-o-y in the third quarter of the current fiscal year.

In Q2FY21 it had projected a 6.4% jump in quarterly revenues with PAT down 3.7%.

Sectoral analysts also remained bullish on growth prospects in the December quarter on the back of sustained sales momentum in rural and a recovery in discretionary categories, along with improved consumer sentiment and spends because of pent-up demand.

India witnessed the world’s harshest lockdown as covid cases surged early last year. This led to a severe disruption in demand and tilted the scales in favour of packaged food makers, and health and hygiene products. Meanwhile, discretionary items, such as beauty products and out-of-home consumption products such as beverages and ice-creams reported a slump in demand.

Researcher Nielsen expects the country’s FMCG market to report a 1-3% decline in full year sales. In its earlier forecast, Nielsen had said FMCG sales returned to 1.6% y-o-y growth in the September quarter, after 19% contraction in the preceding three months of 2020. Nielsen follows a calendar year.

ICICI Securities is estimating sharper growth in third quarter sales with 12.1% revenue growth. However, gross margins for most companies could be under pressure, with rising prices of crude and a few agriculture commodities. Companies are initiating price hikes, selectively.

Discretionary categories could finally see some respite in demand. Analysts at Edelweiss said that with the lockdown restrictions easing, discretionary categories such as hair oil, skin care, hair colour, and juices are beginning to revive. “We expect Emami, Marico, paint companies, and Dabur to report double- digit volume growth y-o-y. HUL’s GSK business and skin care would see good recovery,” it said. Sales of sanitizers and cookies, on the other hand, could cool off after seeing heightened demand in the first six months of the year.

Marico Ltd said in its quarterly update on 4 January that its India business delivered a strong performance with double-digit volume growth. “Parachute coconut oil delivered ahead of its medium-term aspiration. Saffola edible oils continued its growth momentum, delivering double-digit volume growth… There was a steady revival in discretionary categories with the premium personal care portfolios witnessing improving trends sequentially, but still posting a modest decline on a y-o-y basis,” it added. Meanwhile, TV advertising grew in the second half of the year. Hindustan Unilever was the biggest advertiser with 30% growth in volumes over 2019, followed by Reckitt Benckiser Group, with its ad volumes growing by 37% in 2020 over the year-ago, according to data from television monitoring agency Broadcast Audience Research Council released earlier this month.

FMCG industry sees signs of recovery in September quarter: Nielsen

Source: Business Standard, Nov 26, 2020

After an unprecedented decline of 19 per cent in the January-March quarter, the FMCG industry has displayed signs of recovery in the September quarter with a year-on-year growth of 1.6 per cent, according to market insight firm Nielsen.

The growth witnessed in the fast-moving consumer goods (FMCG) sector was also a reflection of positivity witnessed in the overall macroeconomic scenario amid opening up of the economy and easing of lockdown restrictions.

In its India FMCG growth snapshot for the third quarter of 2020, Nielsen said the FMCG slowdown in the second quarter saw a value decline of 19 per cent as compared to the same period of 2019. This was fuelled by massive disruptions in the production and supply chain, and low consumer confidence.

“The unlock from Q3’20, saw a revival in the industry with a growth of 1.6 per cent versus a year ago. The revival was aided by businesses opening up with the pandemic reaching stable levels,” it said.

Markets started opening up in a phase-wise manner and store closures came down to an average of 3 days a month in Q3’20 from an average of 9 days a month in Q2’20. After being cooped at home for a long time, consumers also started looking at resuming normal consumption levels, Nielsen added.

In terms of products, Nielsen said with the opening of the economy all baskets showed signs of recovery, albeit with some clear changes that got reflected in consumers’ product preferences.

“Consumers prioritised spending on essential foods during the locked down quarter and with the unlock quarter this accelerated to double digit growth. We saw an interesting trend in the non-food (Home care and personal care) categories too. The segment registered a movement towards revival with Unlock in Q3’20, indicating a need to move towards normalcy,” it added.

With heightened consciousness around health and wellness, the ‘health and hygiene’ categories have become an integral part of the new normal for consumers and continued to boom in the September quarter as well, Nielsen said in its Q3 snapshot.

“As COVID has prompted consumers to re-frame their habits into health and hygiene, more new launches have been made in the health and hygiene basket, including categories like hand sanitisers, floor cleaners, toilet cleaners, antiseptic liquids,” Nielsen said.

New launches in the health and hygiene space contributed to 37 per cent (in value) of all new launches in the ‘COVID period’. The value contribution of new launches in the health and hygiene category was higher during the ‘COVID period’ at 2.9 per cent, it added.

As far as market geographies are concerned, rural areas continued to drive growth for the FMCG sector.

“With easing of pandemic and markets unlocking in various phases in the third quarter of the year, we saw recovery across town classes with the rural and rest of urban (ROU) regions continuing to lead growth,” it said.

FMCG witnessed a double-digit growth of 10.6 per cent in Q3’20 in rural India, while the bigger cities of over 1 Lakh population, including metros and Town Class 1, played catch-up, it added.

“The rural markets have bounced back handsomely on the back of support provided by the government as well as good agriculture, reverse migration and a lower unemployment rate,” Nielsen said.

Packaged staples and hygiene categories drove faster growth in the rural market.

Nielsen, however, said the impact of the pandemic on consumption patterns is also apparent in the zones of the country. “Higher rural population and lower incidence of COVID cases in the East and North zone have helped these zones recover faster. On the other hand, the West zone that has a relatively higher urban population and had higher severity of the pandemic continued to decline in Q3’20,” the company added.

FMCG cos gear up as Bharat rises

Source: LiveMint.com, Nov 12, 2020

Consumer goods companies are ramping up distribution in India’s smaller towns and villages, where sales are rising thanks to reverse migration, increased minimum support prices, government stimulus measures for the rural economy and a normal monsoon.

Companies are trying out new pack sizes, leveraging online sales, and customizing products to expand their reach in the hinterland.

“We are appointing more distributors to enhance our rural reach. We are also appointing a lot of village-level entrepreneurs so that when the village sales scale up, we are able to convert them into sub-stockists and it becomes a part of our distribution network,” said Mohit Malhotra, chief executive officer, Dabur India Ltd. The company aims to reach 60,000 villages by the end of this fiscal, up from 52,000 in March 2020.

Jyothy Labs has rolled out ₹10 and ₹5 packs of its more urban-oriented dish cleaning brand Exo in villages and ensured last-mile supplies of its products. “Rural has been our strength from Day One. Now we’re putting more effort, appointing more sub-stockists, getting more distribution points and retail outlets and delivering at their doorsteps,” said Ullas Kamath, joint managing director, Jyothy Labs. Rural brings 40% of sales for the maker of Ujala fabric whitener and Pril utensil cleaners.

Growth in India’s villages, which account for over 36% sales for makers of fast-moving consumer goods, had slowed in 2018, pulling down overall growth for the entire industry.

Rural markets with their large population and consumer graduation from unbranded to branded and packaged goods have long been seen as a significant reservoir of growth for companies.

While the lockdown initially disrupted supplies for several companies, it also stoked demand for hygiene products and packaged foods in India’s villages. With the pandemic forcing people to return home —from big cities to smaller towns and villages—tier II, tier III towns and villages saw good traction for consumer goods.

Dabur’s Malhotra said rural demand trends will sustain for some more time, a commentary most large packaged consumer goods firms including Hindustan Unilever have maintained.

Packaged foods and beverage maker PepsiCo India has listed its products on Grameen e-store, a hyperlocal e-commerce platform for villages and enables last-mile delivery. For this, it partnered with common service centres (CSC) under the ministry of electronics and information technology (MeitY). Brands such as Lay’s, Kurkure and Uncle Chipps will be available on the Grameen e-store.

Raju Pullan, senior vice-president, consumer electronics business, Samsung India, said it is already seeing strong demand from tier-III cities as first-time buyers who typically travel to larger cities to buy big-ticket items purchase TV sets and washing machines locally. In response, Samsung has ensured availability in these markets.

“We will continue to focus on the nearby stores because consumers are willing to buy products from such stores,” said Pullan.

“Why we are seeing rural is growing is because one of the best harvests of wheat has been seen this year. Second, this is one of the best monsoon years. Third is government push towards rural—which is minimum support pricing and rural infrastructure. And fourth is efforts by organizations—whether it is rural-oriented packs or other distribution efforts by manufacturers,” said K. Ramakrishnan, managing director at Kantar Worldpanel, which tracks FMCG consumption.

Bharat spurs growth of FMCG companies, but Urban India not far behind

Source: Business Standard, Oct 25, 2020

Mumbai: Rural India has spurred the growth of fast-moving consumer goods (FMCG) companies, at a time when Urban India has been reeling under the impact of the coronavirus (Covid-19) pandemic. The September quarter results of most FMCG companies reflect this trend, with rural growth outpacing growth in urban areas by a wide margin.

While the sales momentum from rural areas is expected to last for another three to six months, urban growth could stage a comeback by the June quarter next year, said analysts, as people learn to live with the virus and economic activity gradually improves in cities.

Around 60-65 per cent of an FMCG company’s sales come from urban areas and 35-40 per cent sales come from rural areas, making the former a critical component of a firm’s topline. Therefore, the sooner the recovery in urban areas, the better it is, say sector experts.

“Rural areas have gained from the good monsoons this year, higher minimum support price in some states, reverse migration and the government’s overall welfare push in the villages,” says G Chokkalingam, founder, Equinomics Research and Advisory. “But as the economy unlocks and job uncertainty reduces in the cities, urban growth will improve. This could happen by the June quarter of the next financial year,” he says.

Sachin Bobade, vice-president, research at brokerage Dolat Capital, says that FMCG companies will benefit next year from a low base on the urban side of their business thereby optimally pushing up urban growth.

Ironically, rural FMCG growth this year has benefitted from a low base, since in the corresponding period last year rural India had grown at its slowest pace in 7 years. Rural areas, for the uninitiated, had witnessed much distress due to a liquidity crisis as well as floods, hitting sales, similar to the weakness that urban areas are seeing this year due to restricted living triggered by the coronavirus.

The segments most impacted in urban areas include discretionary and out-of-home categories, though companies say the scenario will improve in the months ahead as the economic outlook improves.

“Urban is looking a little uncertain at this point. While it is difficult to estimate market growth, we remain cautiously optimistic,” Sanjiv Mehta, chairman and managing director (MD), Hindustan Unilever (HUL), said in a post-results media briefing last week.

Suresh Narayanan, chairman and MD, Nestle India, said, “The rural-urban growth divide will narrow as we go forward with relative normalcy in urban centres.”

Market research agency Nielsen has said that the sales outlook for urban areas will get better as chances of finding a cure for the Covid-19 virus grow. The government has indicated that by the first quarter of the 2021 calendar year a vaccine should be available in the country, though some experts estimate it will take longer, rolling out by June of 2021.

Moreover, administering the vaccine to the masses will take time, they say. Yet, news of a vaccine discovery could bring a sigh of relief to consumers, especially in urban centres, who’ve been hit hard by surging Covid-19 cases.

Rural strategy

For now, companies are turning to the hinterlands, broad-basing their low-unit pack (LUP) strategy and expanding their rural distribution by adding more field force and rural distributors to improve penetration. Varun Berry, MD, Britannia Industries, said that his company was looking at taking its Rs 5 packs across its brand portfolio as it sought to push these products into rural areas. While Mondelez India’s sales director Parveen Dalal said that his company was closing monitoring the consumption index across villages. The purpose was to identify those places where demand was higher for its products in a bid to step up its sales and marketing effort in these areas.