FMCG leaders mark down overall growth to 3% amid coronavirus outbreak

The fast-moving consumer goods market (FMCG) of 4.3 trillion rupees could see its overall growth rate drop to 3% over the period from January to March, as measures to contain the impact of Covid-19 are escalating, the best companies told Business Standard. The gloomy projection of the industry contrasts sharply with the forecasts of the research agency Nielsen, which maintained its quarterly growth prospects of 5 to 6%.

The assessment by companies is based on the foreclosure and tightening of supply that most of them face. “There’s no denying that fear of the virus has an impact on businesses,” said Mayank Shah, senior category manager, Parle Products.

“March was a difficult month and the cookie growth rate fell to 3% this month, from 7% in January and February. April won’t be any better either, as the foreclosure will continue for half the month, which will have an impact on business, “said Shah.

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According to Nielsen, panic purchases of food and hygiene in recent weeks have boosted growth rates for the food and non-food categories by 300 and 400 basis points respectively, compared to January’s figures.

However, companies say the spike will not compensate for the drop in the overall growth rate during the quarter due to the virus.

“Right now, there are panic purchases and pantry loads, which are indicators of a delayed impact of demand in the coming months. Added to this is the magnitude of the economic impact of this crisis. The market will no longer be the same, ”said Suresh Narayanan, President and CEO of Nestlé India.

Mohit Malhotra, CEO of Dabur India, said the foreclosure had delayed the market recovery by several quarters, with most companies’ immediate priority being to restore the supply chain and bring the workforce back into the workforce. factories. “Fear of the virus has exacerbated the situation. The FMCG market was struggling with an overall slowdown in consumption, which has now worsened due to the need for social distancing, “he said.

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“We only carry out the production of essential items such as Chawanprash, Ayurvedic medicines, hand sanitizers and hand washing. Production of the rest has been temporarily suspended until March 31, which will have an impact on sales, “added Malhotra.

In addition to Dabur, Nestlé and Coca-Cola have temporarily suspended operations in most of their factories, while companies such as Britannia, Hindustan Unilever and Godrej Consumer advise local authorities to allow them to continue production and transportation during the period closing.

Varun Berry, Managing Director of Britannia Industries, said: “Our factories are ready to make products right now with all the hygiene and social distancing protocols in place.” But the companies need the support of the district authorities to allow workers to go to the factory premises with appropriate guarantees, he added.

According to Nielsen, buying behavior may change in the future as people choose to shop online rather than crowding kiranas and supermarkets. “The e-commerce chain has grown about 40-50% a year for the past few years now. It will increase as consumers adopt better hygiene standards after the outbreak,” said Prasun Basu, president from South Asia, Nielsen.

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