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    Increased demand for groceries lifts household consumption to a two year high in April-June

    Synopsis

    The fast-moving consumer goods market expanded 4.3% in volume and more than 8.5% by value during the quarter, according to data from Kantar Worldpanel. Kantar's numbers contrast with data from market researcher Nielsen, which showed the market declined 18%.

    grocery--bccl
    MUMBAI: Household consumption of groceries and home and personal care products surged to a two-year high during the April-June quarter, according to a research firm, as consumers stocked up on these products while hunkering down in their homes due to Covid-19-related restrictions.

    The fast-moving consumer goods market expanded 4.3% in volume and more than 8.5% by value during the quarter, according to data from Kantar Worldpanel. Kantar's numbers contrast with data from market researcher Nielsen, which showed the market declined 18%. This is likely because Nielsen mainly covers retail sales of packaged goods while Kantar tracks household consumption of both branded products and those from the unorganised segments.

    "From a household purchase lens, FMCG overall seems fairly strong. While out of home consumption may have seen a sharp drop, the household view is one of positive growth," said K Ramakrishnan, the South Asia managing director at the company owned by communications and advertising giant WPP.

    At an overall level, most listed companies have either posted a decline or stagnant sales growth during the quarter, hurt by falling out-of-home consumption. Also, there is a lag effect with companies posting primary sales data which were impacted by supply-chain disruptions compared with Kantar's numbers which show actual consumption.

    FMCG
    "With people staying at home, both household consumption by volumes as well as frequency was higher across food and non-food products, which reflected in published results. Companies which have lower dependence on out-of-home categories posted good results," FMCG company Marico's managing director, Saugata Gupta, said.

    For instance, Britannia, maker of Good Day and Tiger biscuits, expanded sales by 25%, while Hindustan Unilever said there was a big burst of demand for jams and ketchup as people were cocooned in homes. ITC, which makes Sunfeast biscuits and Bingo Chips, said staples, noodles, biscuits and dairy products saw healthy demand in the June quarter. Marico too said demand for its Saffola cooking oil grew 16% due to an increase in home cooking. It also reported higher in-home consumption of hair oils.

    Kantar's data are heavily skewed toward the food and beverages segment, which accounts for nearly 70% of the overall volume of products covered and has a higher proliferation of items from the unorganised end of the business. Within F&B, foods grew 5.7% but beverages dropped 19% largely because hotels, restaurants and caterers - popularly called HoReCa and account for almost a third of the overall business for beverages companies - were shut.

    "Despite the fact that across the globe and across different states and cities in India, on-premise and out-of-home consumption is getting eased out, we still see a challenge which consumers are still very, very hesitant to step out," Tata Consumer Products managing director Sunil D'Souza told investors last week.


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    ( Originally published on Aug 10, 2020 )
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