ICICI Direct: FMCG Sector Q2 Preview - Supply Restored; Demand Slack In Urban India
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ICICI Direct Report
Fast moving consumer goods companies have restored distribution supplies completely to the pre Covid-19 levels.
However, demand remained slack in discretionary categories, specifically in urban regions, largely due to reverse migration of workers in the last six months.
According to Nielsen data, rural growth was 17%, 4% in July, August, respectively, compared to pre-Covid levels.
However, metro cities are still struggling to return to pre-Covid level demand and witnessing 10-15% lower sales.
Though, we believe new product launches in health and hygiene space has created opportunities for companies to drive growth in newer categories, some discretionary categories like skin care, cosmetics, ice-creams and juices continue to see subdued demand conditions.
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