Chief executives of several leading listed FMCG companies highlighted in their recent earnings calls that the change in the trend was aided further by price increases by the smaller and regional brands, as well as the unbranded trade, during the peak of inflation.
“Moderating inflation and measures in the budget to enhance disposable income and spending will gradually reverse the flow and accelerate unbranded to branded conversions,” Marico managing director Saugata Gupta said. He said the “worst of inflation and volatility is over”.
Gupta said competitive pricing action and relatively lower inflation will reverse the commoditisation in value-added hair oil, which will drive volume growth. Branded coconut oil sales volume has grown in December after four quarters, driven by conversion from the loose segment “with copra prices firming up favourably in the off-season,” he added.
Packaged edible oil manufacturer Adani Wilmar said consumers who had down-traded in the last three quarters are coming back to its premium brand Fortune, after prices reduced. Managing director Angshu Mallick said the edible oil prices have come to a level where the Fortune brand is growing and gaining market share.
“Brands like Fortune would thrive more when the commodity prices are stable or lower. Consumers then buy more, and as you know, in rural India, people buy more on rupee value rather than quantity,” Mallick told analysts. He said the up-shoot in consumption was witnessed from the October-December quarter when volume sales of packaged edible oil grew after two years. He expects 6%-8% growth in volume next fiscal year.
Godrej Consumer Products said the “heavy volatility” in soap prices is over with soap oil prices falling for the last 3-4 months which will lead to market share expansion. Tata Consumer Products managing director Sunil D’Souza said in the case of the tea business, the large branded companies have lost share to the loose and local players which is a temporary phenomenon and “should get corrected”. Dabur chief executive Mohit Malhotra said while rural down-trading is happening at the moment, the winter sowing has been good and harvesting has been better.
