This year, volume growth has exceeded value growth since most FMCG product prices have turned negative, the makers of Good Knight mosquito repellant and Cinthol soaps said.
Talking to ET, Sitapati said commodity prices are now flat to slightly positive, while wage inflation is positive whereby product prices will be little higher than before in next few quarters leading to a high single digit value growth for the industry this calendar year.
“The water has found its own level as far as commodity prices. Unless there is a big geo-political factor, prices of palm oil and crude which are the biggest inputs for FMCG are expected to remain stable in 2024. This will improve overall industry growth rates next fiscal,” he said.
Godrej, which is the market leader in hair colour in India and globally has a complete portfolio in the hair care range, is evaluating options to expand its presence in the domestic market in this segment with newer categories like hair conditioners, treatment and straighteners, said Sitapati.
He said the company is testing the waters since it has these products right now in the salon channel sold under Godrej Professional brand name and depending on the success a separate line up may be sold in retail stores. It is not keen in crowded categories like shampoos and hair oils.“Globally, we have a big hair care portfolio accounting for almost a third of our consolidated business. There are no definitive plans yet to launch those in India, but the potential remains,” said Sitapati. The market for hair care in India is around Rs 35,000 crore which includes shampoos, conditioners, hair colours, hair oils and straighteners.Godrej in its December quarter earnings said India volumes grew by 12% while revenue by 9%. The revenue growth continued to lag the volume growth driven by price declines in personal wash. The company, which is the second largest in soaps, had increased prices of most soap packs by up to 25% in the peak of inflation in 2022 but has now dropped their prices by upto 20%.
FMCG market researcher NielsenIQ recently said the Indian FMCG industry reported 6% growth in value in the December quarter attributed to a 6.4% increase in volume. The researcher said the market is poised to grow by 4.5%-6.5% in 2024.
Sitapati said demand from higher income consumers is “extraordinarily high” whereby the premium products are doing exceedingly well. “The number of such consumers has gone up, with 20% of India now doing very well. The stress is amongst urban poor and rural. As a result, most mass products demand is sluggish,” he said.
The company has recently launched an anti-mosquito agarbatti targeting the mass market with a pack of ten selling for Rs 10, priced at par with the unorganized products and illegal imports from China. Sitapati said this product should help to increase growth rate since it’s a unique one based on a new molecule and the market size for such agarbatti is almost Rs 1200 crore.
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