‘By Diwali we will see some good rural recovery’

Mumbai: Packaged consumer goods maker Godrej Consumer Products Ltd (GCPL) on Friday said it expects recovery in rural markets in the second half of the year on the back of good monsoon and government measures. 

“A lot of people are saying it and I'm also seeing little bit of green shoots (in the countryside)," Sudhir Sitapati, MD & CEO, GCPL, said at the sidelines of an event in Mumbai on Friday. "Also the government is quite cognizant of reviving consumption in rural areas. I'm actually quite optimistic, the monsoon also seems quite good. So I'm quite optimistic of rural revival…for the last two-to-three years I have not been sure, but I think by Diwali we will see some good rural recovery.” 

While market researcher NIQ (Nielsen IQ) pointed to a turnaround in rural demand in the March quarter, several companies did not echo the sentiment reported by NIQ. That's also because companies operate in different categories that have seen more stress at the mass end of the market. 

For GCPL both urban and rural markets grew at “similar levels” in the March quarter.

“Rural has to grow one-and-a-half times as much as urban for the fast moving consumer goods (FMCG) market.  That is what has been the case for the last 20 to 25 years. It's not like rural is actually under-growing urban, it's just not growing faster than urban like it was,” he said.

Sitapati said domestic consumption needs to be spurred. 

“GDP growth rate was 8% last year but domestic consumption was only 4%. Domestic consumption is often a measure of the income growth at the bottom of the pyramid. So 4% domestic growth has to go up. Consumption growth and GDP growth have to be in tandem. I'm sure that the government will take measures to spur domestic consumption,” he said.

On Friday, the company also introduced a new Renofluthrin formulation in its new GoodKnight Flash liquid vaporizer that is set to change the local household insecticide market where illegally imported incense sticks have chipped away market share from incumbents. 

The patented molecule makes GoodKnight Flash the most efficacious liquid vapouriser formulation for mosquito control, the company said on Friday. Patented by a partner, GCPL holds exclusive usage rights of this molecule in India for six to eight years. While Renofluthrin will be in India for now, the company “foresees” great potential for this molecule in international markets where it operates. 

GCPL has been stepping up launches in the household insecticides market where it also sells Hit mosquito repellants. The new GoodKnight product is set to benefit GCPL that controls half of the ₹6,000-crore market for household insecticides in India.

In the September quarter, the company entered the ₹1,200-crore market of anti-mosquito incense sticks dominated by illegal players. The product, marketed under GoodKnight, too contained Renofluthrin. Last year, the company also announced the roll-out of GoodKnight mini liquid and ₹50 Hit spray with plans to reach out to 100-million low-income households.

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Household insecticide brands Hit and GoodKnight contribute around 40% of its domestic business.

Sitapati said the new innovation could push the company to clock double-digit growth in the house insecticide category. “Which is a tall order because for the last 7-8 years, it hasn't grown anywhere close to that," he said. This is due to the market being flooded by highly potent repellent formats such as incense sticks that use unregistered and illegal Chinese developed molecules.

"Liquid vaporizer is the largest part of the household insecticide business—approximately 50% of our household insecticide business comes from liquid vaporizers. So this is the most important, the most profitable part of our business,” he said. 

GCPL's market share in the household insecticides market has been “roughly flat” over the last few years, he said, citing the popularity of formats such as illegal incense sticks.

GCPL also sells hair colours, soaps and household care products in India and sub-Saharan Africa, and Latin America. For the fiscal ended 31 March 2024, GCPL’s consolidated revenue from operations stood at ₹14,096.11 crore.