Discretionary packaged goods sales revive in June3 min read . Updated: 02 Jul 2021, 01:46 AM IST
- Easing of curbs boosts sales in categories such as confectionery, beverages
Easing lockdowns, longer store hours and rising mobility boosted June sales of more discretionary and impulse purchase categories such as confectionery, beverages and personal care.
Data compiled by Bizom, a retail intelligence platform tracking sales at 7.5 million retail stores, showed the positive impact of loosening restrictions after the severe second wave of the pandemic wave ebbed. Industry executives confirmed the recovery.
“Discretionary categories that saw the biggest impact on sales in previous months, that is, personal care and confectionery, are showing the highest jump in sales growth month-on-month," said Akshay D’Souza, chief marketing officer at Bizom.
D’Souza said that beverage manufacturers are reporting a strong end to the quarter—with sales for the month of June, significantly higher than the previous month. “Trade schemes coupled with unlock across most parts of India are helping to liquidate stock lying at retail shelves," he said.
Bizom data showed that in the first three weeks of June, personal care sales grew 50% month-on-month, while confectionery saw growth of 41%; sales growth in beverages, which are skewed towards the summer season, was up 31%. Sales in home care and packaged foods categories grew 18% and 15%, respectively, the data showed.
A beverage industry executive said that demand for packaged drinks in June was upwards of 85% of pre-covid levels. This, he said, was led by in-home consumption of drinks.
“Things are improving fast," said Neeraj Kakkar, co-founder and chief executive officer of Hector Beverages, which sells a range of Indian beverages under the Paper Boat brand. “Business in June was 85% of pre-covid plan, while May was 50%. From July, we could be back to 100%. In-home consumption is almost 100% and out-of-home is around 75%. Hopefully, out-of-home consumption of beverages should be back to 100% this week."
Confectionery maker Perfetti Van Melle’s products such as Alpenliebe candies fall under the impulse purchase category, and gained from rising street mobility that helps consumers pick the products on the move.
“In June, we are pretty close to 90% of numbers compared to last June," managing director Rajesh Ramakrishnan said. “The second half of April and May was a washout for us. In our case, while the sales dip is big, so is the bounceback. That’s because we are very dependent on people going out on streets (so lockdowns translate to lower sales), and also because we are predominantly at a lower price point, which means people can buy without thinking too much," he added.
Most companies reported a healthy March quarter with demand normalizing across categories, despite rising costs of key commodities. The second wave in the June quarter, however, derailed the recovery for several categories.
“There was some stress on demand from April till the end of May. But with June, and things opening up, we are seeing good revival in demand," said Mayank Shah, category head at biscuit-maker Parle Products.
Shah said normal store-operating hours, which had earlier been restricted to a few hours daily, helped lift demand. Modern trade sales are also on an upswing, he added.
Bizom’s data suggest that the second wave of the pandemic and subsequent lockdowns saw fast-moving consumer goods (FMCG) sales decline significantly month-on-month. In April, sales were down 16% compared to March; numbers in May declined further.
“However, in June, the tide has turned. Sales are up by 23% month-on-month in the first three weeks. Almost all categories are up (except commodities)," D’Souza said.
Commodities seem to be the only category under pressure even in June. Edible oil and sugar have seen a surge in input costs that have driven up the price significantly over the past three quarters, D’Souza added.
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