Consumer Demand Intact As Distributors Feel GST Pain, Says Nielsen
Food continues to lead FMCG growth.
Demand from consumers goods remains intact even as distributors struggle to switch to the Goods and Services Tax, market researcher Nielsen said.
Overall growth is still in “early double digits” even in the post-GST period and is expected to remain stable throughout the financial year, Sameer Shukla, executive director of Nielsen India, told BloombergQuint in an interview. And it’s fuelled by foods. “Within foods, staples including edible oil and those segments are really doing very well,” he said.
Distributors pared stock ahead of GST rollout fearing losses on transition stock and due to change rates. That hurt the primary demand for fast moving consumer goods. And they are yet to come to terms with increased compliance and online filing, making the transition slow. Yet, consumption remains intact.
“If you link it with macro-economics, whether it is inflation or food inflation or consumer sentiments, we have not seen anything which is unfavourable,” said Shukla. “We have seen in the last few months that the acceleration in consumption was three to four (percentage) points, which is healthy.”
The FMCG sector grew in double digits in the year to August as consumers move from unbranded to branded items. Demand for homecare and personalcare products was in single digit, Nielsen said. And that’s despite demonetisation and GST.
Prices didn’t change much, Shukla noted. Initial reports for the month of September show that manufacturers have started offering extra grammage are or lowering prices.