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Companies selling in-home consumption products perform well on 2-year basis

Packaged food companies performed better as consumers bought more biscuits, edible oils, snacks, and frozen foods for in-home consumption. (File Photo: HT)Premium
Packaged food companies performed better as consumers bought more biscuits, edible oils, snacks, and frozen foods for in-home consumption. (File Photo: HT)

  • Discretionary goods such as personal care products are yet to fully recover. For instance, ITC’s cigarettes volumes fell 18% on a two-year basis. Bajaj also performed poorly due to discretionary nature of its portfolio

NEW DELHI: Packaged consumer goods companies selling products suited for in-home consumption benefited in the post-pandemic world, reporting better revenue growth over a two-year period, according to a report by Edelweiss Securities.

“On a two-year basis, companies with more in-home consumption portfolio, hygiene and personal care did well as they received a push during the pandemic, followed by second wave impact. On the other hand, discretionary portfolios and summer consumption have been negatively impacted," the brokerage said in a report on the consumer staples sector

This is especially true for packaged food companies as consumers bought more biscuits, edible oils, snacks, and frozen foods for in-home consumption.

Britannia Industries, Tata Consumer and ITC’s FMCG segment, which has a strong in-home consumption portfolio, evinced good response, boosting volumes and therefore revenues. GCPL also saw a similar effect due to its household insecticide, personal care and hygiene portfolios, it said.

Revenue growth was also aided by price hikes taken by several large companies over the last two quarter as commodity pressures remained high.

Companies selling soaps, packaged tea, edible oil, snacks etc took prices hikes in March and June quarters.

“Revenue and volume growth over two years were shaped mostly by portfolio mix, and relevant and activations riding evolving consumer trends. Revenue growth has benefited from pricing action as most companies took some pricing action to combat inflation," the brokerage added.

Meanwhile, discretionary goods such as personal care products are yet to fully recover. For instance, ITC’s cigarettes volumes fell 18% on a two-year basis. Bajaj also performed poorly due to discretionary nature of its portfolio.

Several companies diversified their portfolio, launching surface cleaners and disinfectants as demand for such products surged.

“Companies which were quick to launch products and activations based on consumer trends like rising concern for health, safety and immunity driven by pandemic saw increased revenue traction," the report added.

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