FMCG companies expect demand to pick up in the second half of FY23

6 Oct 2022 , 07:59 AM

According to various quarterly updates, a normal monsoon and an easing of inflationary pressures should lead to a rebound in demand for daily grocery and household goods in the second half of the fiscal year.

During the second quarter that concluded in September, consistent price increases across categories continued to put pressure on household spending and have an effect on consumer demand.

The producer of Parachute and Saffola oil, Marico, stated in a quarterly performance update that “consumption trends should improve in the second half of the fiscal given retail inflation is expected to cool off as a result of government interventions, moderating commodity inflation pressures, and reasonably healthy spatial distribution of monsoons.”

The business continued, “Higher crop realizations and the impending festive season should also provide a fillip to general sentiment.”

Companies said that demand from June to September was comparable to the prior quarter, which saw volume fall due to pressure on rural consumption. Rural sales volumes have been steadily declining over the past year, with decreases in the March and June quarters of around 9% and 7%, respectively.

Conversely, villages and mass-priced categories continued to perform worse than urban and premium discretionary segments. In its investor report, Godrej Consumer Products stated that “the Indian FMCG industry continued to remain soft throughout the (September) quarter.”

“In comparison to urban markets, growth in rural markets was slower. However, given that commodity price corrections have moderated inflationary pressures and that the monsoon is substantially on schedule, we anticipate an improvement in spending in the second half of the year.”

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