Companies like Adani Wilmar, Marico, Dabur and Godrej Consumer Products on Thursday and Friday said in investor notes that there has been volume-led growth in their sales in the October-December period. But value growth came under pressure as companies cut prices from early 2023 to pass on the benefit of lower raw-material costs.
India’s largest edible oil company, Adani Wilmar that sells the Fortune brand of products, on Friday said it recorded the best-ever volumes in branded oil and foods during the last quarter. The company cited demand during the festive and wedding seasons and rural sales, and a drop in retail prices, for the volume growth over a strong base quarter. While sales volume grew 6% from a year earlier, Adani Wilmar said lower pricing of edible oils in line with a fall in the cost of raw materials resulted in a 15% decline in revenue.
Godrej Consumer Products said volume growth was likely in a high single digit, but sales value growth was flattish last quarter. Marico, which sells the Parachute coconut hair oil and Saffola oil, said domestic volumes grew in a low single digit year-on-year with a slight sequential improvement in core portfolio. But consolidated revenue declined by a low single digit.
“After a few quarters, volume growth has been better than value growth for the fast-moving consumer goods industry last quarter, driven by price cuts ensuring consumers purchase more,” said Mayank Shah, senior category head at Parle Products, India’s top biscuits maker. “Till about September, the industry growth was driven by value only,” he said.
“We expect this momentum in volume growth higher than value will sustain at least for the next two quarters with food inflation remaining under control due to upcoming general elections,” he said. After that, he said, demand would depend on how food inflation pans out.Even in the discretionary segment, volume growth has surpassed value in categories where prices have come down.Latest data from market researcher GfK India for January to October 2023 show that with the 8% fall in average selling prices of televisions, the value growth for the category declined by 7% but volume growth accelerated by 2%.
Festive discounts
For audio home systems, there was a 6.4% fall in the average selling price which boosted volume by 3%. But value growth declined at the same pace. This is in contrast to appliances where volume continues to trail value growth due to a slower pace of price drops.
Anant Jain, head of market intelligence – India at GfK, said the decrease in average selling prices during the festive season had resulted in a comprehensive upswing in sales this year, underscoring the dynamic evolution of consumer preferences.
As per FMCG market researcher NielsenIQ, value growth was higher than volume in the last few quarters but the gap was narrowing.
In the July-September quarter, value growth was 9% and volume growth was 8.6% as compared to 12.2% and 7.5%, respectively, in the preceding quarter.
Industry executives said consumption should recover in the next 3-4 months aided by lower food inflation, a further drop or stable product prices, increased economic sentiment in rural India ahead of the general elections and improved consumer sentiments in urban India led by economic growth.
