FMCG companies see healthy sales growth signalling a revival in consumer demand

In the past few months, the Indian economy has had to withstand a peculiar kind of a challenge.

This challenge mainly comprised of various doomsayers publicly coming out and being highly pessimistic about Indian economy’s prospects. This pessimism included, former Finance Minister Yashwant Sinha making sweeping charges against the Modi government, its management of the Indian economy and reports indicating that India’s consumption demand might start falling.

The main fundamentals backing this morose outlook were India’s GDP growth numbers falling to a 3 year low of 5.7% in the 1st quarter of 2017 and the disruptive decisions taken by the Modi government in the form of GST and demonetisation.

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The perception of the Indian market then soon got a boost, thanks to global financial giants like World Bank, IMF asserting that the Indian economy is on the right track. They also stated that the disruption caused by schemes like GST and demonetisation would only have a short term impact.

Soon after that, we saw consumers starting to speak with their pocket. With the advent of Diwali, a festival which spurs high consumer demand, reports came out about e-commerce firms expecting a 50% sales growth in October as compared to same time last year. Other reports included gold sales picking up before Diwali, and last minute shopping rush during the festival.

Now another report has surfaced indicating that consumer revival is very much on the cards, thanks to a surprise increase in sales volumes of consumer packaged goods and consumer durables. As per the report, the growth seen in FMCG companies include, Hindustan Unilever reporting a 4% growth for 3 months in the July to September quarter.

Also Dabur India, Marico and Godrej consumer products limited (GCPL) saw healthy growth rates of 7.2%, 8% and 10% respectively in the same period.

This was both commendable and surprising, considering Dabur and Marico clocked growth rates of -4.4% and -9% in the June quarter. Hindustan Unilever and GCPL had registered no growth in that period.

The report also claimed that apart from the urban markets, even rural markets are showing signs of a gradual recovery, despite having suffered more due to issues like cash crunch via demonetisation and supplies getting impacted because of the wholesale network running down its inventory ahead of GST’s implementation.

It remains to be seen if such cases result in an overall demand revival and also if the grim days (if there were any) are finally behind us.


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