Festive Demand Fails To Propel FMCG Sales In Third Quarter: BQ Survey

Consumers chose to spend on food items like biscuits, essential products like edible oil, flour, food grain, and immunity boosters like honey and Chyawanprash during the quarter, while demand for non-essentials such as homecare and personal care products dropped, the bulk dealers told BloombergQuint on the condition of anonymity out of business concerns.

People opting to shop online amid the pandemic as well as to avail discounts were another dampener for the distributors, they said.

India’s fast-moving consumer goods companies, by value (a combination of volume and price-led expansion), sold 88.7% of their goods through traditional trades in the three months ended September, according to Nielsen India. The market researcher expects the FMCG industry to contract 1-3% in 2020 compared to its earlier forecast of -1 to 1%. That’s the third time Nielsen had cut estimates for the sector this year.

Here’s what distributors had to say...

Punjab: Sales and volumes were impacted in the quarter as consumers remained tight-fisted. Demand for festive gift packs was higher in the run-up to Diwali but December saw an impact as demand dropped.

Maharashtra: Demand was strong in the first half of the quarter but took a hit later as consumer remained cautious on spending. While A-class or nationalised brands have witnessed a drop in demand, B-class or regional brands benefitted as consumers looked for cheaper alternatives. Non-food sales witnessed a contraction during the quarter but that of biscuits remained higher compared to a year earlier.

Gujarat: Demand for essentials dropped 20% and 40% for non-essential items during the quarter. While the state witnessed better sales in November, a drag in December may impact the performance of the entire quarter.

Telangana: Demand for non-essentials dropped 30%, while the sale of essentials remained flat compared to a year earlier.

Odisha: As the state has not witnessed harsh winter so far, the sale of winter products such as creams and lotions were impacted but demand for soaps rose. Sale of immunity-building food products rose 15% year-on-year during the quarter, helped by chyawanprash and honey. Demand for non-essentials was down 10%. Detergents consumption was not impacted for mass brands, but for premium brands it remained under pressure. Most of the state is rural and dependent on agricultural income, which was not as severely impacted due to good monsoons.

Goa: Sales recovered in December as tourists started to flock. Demand for food products like juices, biscuits and chips was 15-20% higher compared to the previous two months of the quarter. While overall sales may remain flat in the quarter over the year earlier, they won’t contract, thanks to a revival in tourism.