Packaged goods sales dip amid covid curbs

Demand for home care products fell as consumers went easy on purchasing hygiene products

Suneera Tandon
Updated27 Jan 2022
There was close to a double-digit drop-in sale in the opening two weeks driven by a drop in active kirana outlets
There was close to a double-digit drop-in sale in the opening two weeks driven by a drop in active kirana outlets(HT)

Sales of fast-moving consumer goods fell 9.9% in the first fortnight of January from a month ago, as curbs aimed at containing the spread of Omicron and a sharp drop in mobility crimped demand for packaged foods and beverages.

Data from retail intelligence platform Bizom, which tracks sales across 7.5 million retail stores, showed the number of active kirana outlets was down 8.4%. Active kiranas refer to those that were fully operational.

“We’re seeing close to a double-digit drop in sales in the opening two weeks, driven by a drop in active kirana outlets,” said Akshay D’Souza, chief marketing officer at Bizom.

Demand for packaged foods and beverages plunged 22.8% and 12.5%, respectively. Confectionery sales, too, dropped by 12%, the data showed. These categories are linked to out-of-home consumption, wherein consumers tend to purchase such products while on the move. State and city-wise restrictions on mobility and operating hours for stores impacted consumption outside homes.

“As out-of-home consumption reduces, we see packaged foods and beverages products show a drop in sales. We’re also seeing a drop in mobility, with travel services being impacted. This has affected sales of ready-to-eat products within packaged foods that were the fastest-growing category in December,” Bizom said.

However, with several large cities reporting a decline in infections, beverages will start seeing “aggressive” placement on shop shelves by companies next month in anticipation of a strong summer season, according to Bizom.

Demand for home care products, too, dropped in the first 15 days of the month as consumers went easy on purchasing hygiene products. Consumer interest in the hygiene category, especially household cleaning products, continues to wane. This is despite a significant surge in daily caseload. There seems to be almost no panic and hygiene obsession, unlike in earlier waves, according to Bizom.

“The reason for sluggish demand is not just Omicron restrictions but a slowdown in demand in January as compared to December. We are seeing demand pick up since mid-January and expect it to continue in February,” said Krishnarao Buddha, senior category head at Parle Products.

Meanwhile, Bizom data also indicated lower spending on discretionary products. For instance, demand for personal care products fell by 18.7%. “We continue to see the stress on social interactions and regular school, college and office going that have affected personal care products,” Bizom said.

Like in earlier waves of the pandemic, consumer interest in essentials and at-home products saw an uptick. “We do see renewed interest in rice, edible oils, blended spices, atta, etc.,” D’Souza said.

Though consumer spending remained focused on need-based products as they eschew discretionary expenditure, D’Souza said business recovery would be faster, and the impact on business will be significantly lower in this wave.

Meanwhile, FMCG firms have started to declare December quarter earnings. Sales of Hindustan Unilever Ltd (HUL), India’s largest consumer goods firm, rose 10% in the December quarter to 12,900 crore from 11,682 crore a year ago. Underlying volume growth, however, slowed to 2% from 4% in the previous quarter. HUL raised product prices last quarter to offset a steep rise in input costs. Chairman and managing director Sanjiv Mehta said inflationary pressures may keep volume growth expectations in check. Also, business conditions are expected to remain tough amid a slowdown in the rural market, Mehta said in a post-earnings media call on 20 January.

Pallavi Pengonda contributed to the story.

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