Pre-Diwali stocks lead to 4.4% rise in FMCG sales this festive season: Report

New Delhi: Fast-moving consumer goods (FMCG) sales, excluding staples like edible oils, wheat, and rice, witnessed a 4.4% rise during this Diwali season, according to retail intelligence platform Bizom.

Bizom analyzed retail trade data for 14 days leading up to Diwali in 2022 and 2023. Categories such as dairy, home care, and confectionery, along with gifting boxes, were the key drivers of demand this festive season. Beverages, on the other hand, remained a laggard, reporting a 4.7% decline in demand. Dairy product sales played a key role in boosting demand during the pre-Diwali period, with sales up nearly 38%. Confectionery sales also jumped 16.5%.

Diwali stocks at retail outlets registered a mid-single-digit growth, with kiranas stocking up across categories. However, five days prior to Diwali, demand for packaged goods witnessed a modest 2% year-on-year increase.

“There was a surge in sales across dairy products with homes across the country looking to prepare sweets and savories,” said Akshay D’Souza, chief of growth and insights at Bizom. “Sales of ghee, butter, curd and other dairy products saw a strong growth in sales driven by this festive demand. We also saw a strong increase in confectionery as gifting packs were stocked in large numbers due to the festive gifting trend among people celebrating Diwali,” he added.

Given the recent consumption trends where there has been pressure on FMCG growth, this sales growth number is good to have. “Even more so as this is on the base of last Diwali that saw a surge in demand for packaged goods,” D'Souza said.

Bizom excluded edible oils and other staples from the data on account of the continued drop in prices of the commodity. A sharp price drop in edible oils is leading to a dip in overall sales. “We continue to see the drop in prices of edible oils impacting sales growth of branded commodities. This is also weighing heavily on overall growth of FMCG. With commodities, the growth number is much lower as sales value has de-grown for those products, mainly due to drop in prices year-on-year for edible oils," D’Souza said.

Meanwhile, demand for home care goods was up nearly 12% compared to a year ago period, on the back of greater demand for cleaning and hygiene products as people welcomed friends and family for the Diwali parties and festive greetings. Packaged foods reported a 1% jump in sales, according to data released Tuesday. Sales of personal care goods dipped nearly 9% year-on-year.

“For the rest of November, we will definitely see a slight mismatch in terms of store-level stocking and actual consumption leading to an increase in inventory days. This will lead to a number of brands offering strong discounts and schemes to ensure stocks are liquidated from stores and restocking can happen sooner,” D’Souza said.

To be sure, sales of fast-moving consumer goods were up nearly 5% in September year versus a year ago, Bizom had said earlier. However, sales were down 2.3% year-on-year for the September quarter. Quarterly sales growth was impacted mainly on account of lower demand for branded commodities and beverages.