FMCG firms see some signs of recovery in rural demand

20 Jul 2022 , 08:53 AM

A number of manufacturers of consumer goods claimed that in recent weeks, there have been signs of a recovery in rural consumption, with volume sales of daily necessities and groceries increasing and helping to drive their own sales increase. In the past four to five weeks, sales volumes of value packs of biscuits have increased by 10% at Parle Products, India's largest biscuit manufacturer, while growth rates for small packs of premium range have increased by 5%. For the previous three to four quarters, these two segments experienced growth of 3% and 1-2%, respectively.

The edible oil and packaged commodity company Adani Wilmar has so far claimed a 10—12% increase in sequential growth in July compared to June. The rebound will pick up steam immediately, according to executives of Emami and RSPL Group, which owns the Ghari brand of detergent and Venus soap.

Sushil Kumar Bajpai, president of RSPL Group, said, "Rural slowdown was a transient phenomenon and you cannot expect customers to hold the purchase of everyday necessities in abeyance for long periods of time." "We also observed increasing village penetration, which aided recovery."

India's villages, which account for 35% of the country's FMCG sector sales, saw growth slowing down starting in September as consumers were compelled to buy products at lower prices or forego making any purchases due to sharp increases in the cost of food, other daily necessities, fuel, and labor.

Value packs and small packs of the premium range are the first to rebound following a downturn, according to Parle Products senior category head Mayank Shah. Both of these have their roots in rural India, and he noted that the rate of recovery is quickening week by week.

According to data from sales tracker Bizom, the growth of urban FMCG sales decreased by 6.9% in the first two weeks of July, while the reduction in rural sales was only negligible at 1.7%.

Industry executives credit the improvement to a healthy monsoon, the positive effects of recent agri-inflation, which has placed more money in farmers' pockets, and the relative lower base of the prior year following bumper sales in 2020 as a result of Covid-led reverse migration.