Active Stocks
Thu Mar 28 2024 14:59:25
  1. Tata Steel share price
  2. 156.00 2.06%
  1. HDFC Bank share price
  2. 1,452.00 0.78%
  1. ITC share price
  2. 429.85 0.43%
  1. Power Grid Corporation Of India share price
  2. 277.70 2.45%
  1. State Bank Of India share price
  2. 754.75 2.82%
Business News/ Industry / Retail/  Packaged goods volumes seen taking a hit
BackBack

Packaged goods volumes seen taking a hit

Major packaged consumer goods companies report lower sales volumes during January and February

Analysts at Kotak Institutional Equities said they expect modest growth or decline in year-on-year volumes for most consumer companies in the March quarter. Mint Premium
Analysts at Kotak Institutional Equities said they expect modest growth or decline in year-on-year volumes for most consumer companies in the March quarter. Mint 

NEW DELHI : High inflation and repeated price increases by packaged consumer goods companies has impacted demand as evident in lower sales volumes reported by major firms during January and February.

In its March quarter update issued on Tuesday, packaged consumer goods firm Marico Ltd cited data from market researcher Nielsen and said consumption trends remained subdued for the industry amid weak rural sentiment and high commodity prices.

“While companies effected price hikes across packaged consumer goods categories to cope with the cost-push, persistent inflation continued to hurt consumer wallets across rural and urban. As a result, FMCG volumes declined in the January-February 2022 period on a year-on-year basis (per Nielsen)," it said of the industry in its update.

However, the company said its India business stayed “relatively firm", riding on execution and market share gains. “Revenue growth in the quarter was in low single digits, while volumes were marginally positive on an exceptionally high base (25%), leading to a double-digit volume growth on a 2-year CAGR basis," said the maker of Saffola edible oil and Parachute hair oil.

On Wednesday, Mumbai-based Godrej Consumer Products Ltd said the Indian packaged consumer goods industry has witnessed a consumption slowdown over the last few months. “The sector continued to be hit hard by higher inflation levels, leading to successive price increases, and impacting volumes. Despite this, we remain competitive given the relatively non-discretionary, mass pricing of our portfolio. We have been gaining market share in 85% of our categories," the company said in its March quarter update filed with the exchanges.

In India, the maker of Cinthol soaps expects to deliver close to double-digit sales growth, driven entirely by pricing, it said.

Meanwhile, analysts at Kotak Institutional Equities said they expect modest growth or decline in year-on-year volumes for most consumer companies in the March quarter. The brokerage released on Wednesday its fourth-quarter earnings preview for consumer companies including those in the packaged goods, retail, and food services sectors. Among other things, Kotak highlighted deceleration in staples demand led by continued weakness in rural markets and impact of inflation and a broad-based raw material inflation that it said will weigh on profitability.

“Discretionary pack would continue to outpace staples pack—we estimate three-year revenue CAGR of 7% and 14% for staples and discretionary (excluding ITC) pack, respectively," it said. In staples, for companies such as Hindustan Unilever Ltd., ITC Ltd, Nestle India and Marico, Kotak expects negligible or negative volume growth and mid-to-high single digit value growth largely led by price hikes.

Earlier this week, in a series of reports by ICICI Securities, chief executive officers of large packaged consumer goods firms flagged moderation in volumes citing high inflation across products and commodities.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 07 Apr 2022, 01:03 AM IST
Next Story footLogo
Recommended For You
Retail Stocks
₹4,4191.58%
₹2.040%
₹0.82-3.66%
₹3,873.42.16%
₹2,103.62.21%
Switch to the Mint app for fast and personalized news - Get App