FMCG market grows 6% in value in August over July

 FMCG market grows 6% in value in August over July


India’s fast-moving consumer goods (FMCG) market increased 6% in value in August compared to July, reversing the past three months of consecutive sequential decline, as demand for personal care and commodity products picked up. Sales of groceries rose 23% compared to a year ago, according to the latest report by Bizom.

“The worst is over. As you go down the population strata, if there is food inflation, then people tend to titrate on FMCG buy and either down-trade or downgrade. But now, food inflation is broadly getting under control,” said Saugata Gupta, managing director at

. “Also, the low base effect will kick in for the FMCG industry and we might see some uptick in rural consumption in the second half with the inflation going down.”

Consumer inflation hit an all-time high in April in the wake of the Russia-Ukraine war as companies increased product price tags by 15-20% over the past year. Over the past two months, however, there has been a 25-50% price correction in two crucial commodities – crude and palm oil – used by the FMCG industry.

Softening global prices have led to companies either halting their price increases or in some cases slashing them.

Boost from Edible Oil Price Cuts

On being prompted by the government, edible oil companies cut prices by Rs 10-15 per liter last month in addition to a Rs 15-25 drop in prices in the last three to four months.

Edible oil and packaged commodity firm

‘s chief executive Angshu Mallick said after the drop in prices of edible oil, affordability and sales improved. He said there are multiple other indicators pointing to better volume offtake in the next few months. “The good monsoon in rural markets, preparation for a good harvest from October, advancements of the festivals this year-all point to further improvement in consumer sentiments and FMCG sales,” said Mallick.

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Commodities that include edible oil saw a 17% jump in sales while increased mobility and reopening of offices led to a 14% increase in personal care product sales month-on-month, according to Bizom that tracks 7.5 million retail outlets.

“This is particularly heartening as it signals that people are back to purchasing discretionary products as we have entered the festival season and the worries of inflation and controlled household budgets on non-essentials may well be in the rear view mirror,” said Akshay D’ Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom. “We have seen an increase in consumption of high value packs too on the back of aggressive promotions in the lead up to festival sales.”

DISCRETIONARY SPENDS

Sales of electronic goods such as air-conditioners and refrigerators fell 10% sequentially and 20% over a year ago, with the mass segment failing to pick up even though the premium range continued to grow. This is despite a buoyant Independence Day period sales in cities and large towns where sales grew 5-7% over 2019 levels. July historically is a bigger month than August due to extended summer sales in the North.

“The mass segment, which contributes over 70% of total industry sales, continues to remain under pressure wiping out the effect of the 25-30% growth in the premium segment,” said Godrej Appliances business head Kamal Nandi. “Sales spike during special days like Independence Day is only for a few days and it is unable to lift overall monthly sales,” he said.



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