As per Adani Wilmar, Tata Consumer Products, Colgate, LT Foods, Spencer’s Retail and market researchers NielsenIQ and Kantar, volume sales of packaged products in categories such as edible oil, spices, atta, toothpaste, rice, pulses grew in July-September quarter which most of them said will continue in the current October-December quarter.
In contrast, typically during a slowdown, consumers either downgrade to smaller packs of essentials, or buy more of local brands for lower price or shifts to loose products which impacts the pace of growth which has not happened this time around.
NielsenIQ said food volume growth in the September quarter was driven by staples, especially edible oil, packaged atta and spices despite price growth. The researcher said food consumption growth due to staples improved to 3.4% in July-September as compared to 2.1% in April-June period.
Food and grocery retailer Spencer’s Retail chief executive officer Anuj Singh said while the discretionary categories are impacted more, the non-discretionary items which are part of a monthly household consumption basket have remained strong. “So we’ve seen staples for us have done well, fresh has done well, whereas some of the non-discretionary categories have got impacted in quarter two,” he said.India’s largest packaged edible oil company Adani Wilmar posted 21% growth in sales last quarter and a volume growth of 17% which it expects will improve in the December quarter due to weddings. Tata Consumer Products reported 26% growth in packaged pulse and value-added salts last quarter. LT Foods, which sells the Daawat brand of packaged rice, reported over 10% growth in volume in the first half of this fiscal, while Colgate India posted 10% growth in toothpaste last quarter.
This comes at a time when India is facing high food inflation which played a role in the sudden softening of urban demand last quarter even though rural demand is on a recovery path due to good agricultural produce and return of government spending after the elections.
There was a 10.9% spike in food prices in October as compared to 9.2% in September and 6.6% in the year-ago period due to high vegetable and fruit prices.
Colgate India managing director Prabha Narasimhan said while there is certainly a little bit of headwind as far as urban growth is concerned, she expects it to be temporary. “We have so much headroom to go in terms of moving per capita consumption, our focus really needs to be on that instead of worrying about the big macro indicators and what’s happening outside our control,” she told ET.
Researcher Kantar, too, said in a recent report that staples such as spices and edible oil leading the growth in the food and beverages segment last quarter is a big indicator that a turnaround is right around the corner. It said snacking no longer has that double-digit growth, but is still healthy.
As per value sales data by Bizom, commodities grew the fastest in the FMCG industry at 26.4% in July-September period year-on-year while in October it increased by 28% yoy.
Vishesh Dora, chief of staff at Bizom, said edible oil prices were up 20% compared to last year, followed by 22% improved market coverage and movement towards branded oil in rural markets that drove growth. Also, the overall commodity basket price has risen by 13-15%, he said.