After more than a year of sustaining lowdown, FMCG firms have started to witness recovery in demand with major players now stating that they are confident of sustaining growth, if the situation remains favourable. “Most companies have witnessed a sequential recovery in July, Aug, and Sep and are confident on sustaining healthy growth in the coming months, provided there are no further lockdowns,” an HDFC Securities report said on Monday. The recovery has been aided by a resumption of production after lockdowns, improving supply chain and new launches coupled with an increased demand in packaged foods, health and hygiene categories.
Packaged food gets traction
FMCG players such as ITC have been witnessing an increase in demand for packaged food as most people remain confined to their homes and are still skeptical of visiting restaurants and going out in public spaces. “Higher demand for packaged food, health and hygiene categories have been giving opportunity for the company to capitalize on its wide product portfolio,” HDFC report said. Marico has been witnessing high traction for its Saffola range due to an increase in-house consumption.
Upcoming festivities may bring cheers
FMCG players are also banking on the upcoming festive season for a growth revival. “Festive demand is expected to be strong, with pent-up demand supporting the festive season offtake,” the report said citing key takeaways from Dabur management commentary.
Players bank on expansions
Further, players have also been on strategic inventory expansion (ITC in its Savlon brand and Dabur has forayed into the edible oil category). Dabur, with its debut in edible oil, is looking to capture the market largely dominated by unorganized players. Parachute maker Marico is also focusing on new launches and market share gain.
Rural recovery looks promising
Companies have also started to report recovery in rural growth, which last year was one of the chief contributors to FMCG slowdown. “Rural growth has remained ahead of urban, and the company (Dabur) expects this trend to continue owing to a strong monsoon and government incentives,” the report said. India has reported healthy monsoon this year, which is crucial to rural income as agriculture depends highly on monsoon. Rural demand also plays a heavy hand in FMCG growth.