While the impact was most visible in the beverages category, which declined 28% year-on-year in the quarter, the overall fast-moving consumer goods (FMCG) market fell 5%, according to Bizom, which tracks kirana sales.
Neeraj Khatri, chief executive of Wipro Consumer Care, India and Saarc, said the second half of the previous fiscal year had been better, with lower inflation and a growth recovery. “We expected FY24 to start on a strong note, particularly after a strong March quarter, but it hasn’t panned out that way,” he said.
Recovery by 2023-end
An erratic summer has hit the sale of seasonal categories in consumer goods.”With inflation under control, margins have improved and volume growth is back, but it is still less than expected,” Khatri said. “Rural is trending better than last year. However, growth is still muted.”Companies and experts said demand recovery in the consumer sector has now likely been pushed forward by another quarter and is expected only by the end of the calendar year. Also, performance will largely be dependent on the June-September monsoon.”While the onset of rainfall has been slightly delayed, we do expect that if we get to a normal rainfall season, we could see spending getting triggered, even among discretionary products,” said Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom. “We are also seeing strong measures being put in place to keep a check on prices of edible oils through import duty cuts and ensuring adequate supply to tide over any potential El Nino crisis.”
El Nino could have an adverse effect on the monsoon, experts have said.
Slowing growth is not restricted to essentials and lower-priced products. Air-conditioner sales dipped 9-11% year-on-year in April-June, while refrigerators dropped 12-13%, as per estimates by the industry.
This is despite over 100% year-on-year growth in AC sales in the east due to a prolonged heatwave. That was more than offset by a muted performance in the north – the largest regional market, accounting for over half of industry sales – which shrank due to sporadic rainfall through the summer.
LG India’s AC business head Kulbhushan Bhardwaj said this has been the worst year since 2011. “There was growth in the north in June, but it was not sufficient to balance the shortfall in April and May,” he said.
