FMCG sales recover in September as kiranas stock ahead of festive season

Sales of fast-moving consumer goods (FMCG) witnessed a recovery in September after witnessing a double-digit decline in August, according to data provided by Bizom.

Kirana stores in rural areas resorted to stocking ahead of the festival season, which starts in September, coupled with rainfall being 113 per cent of the long period average in the month.

In September, FMCG sales were up 4.9 per cent compared to last year, driven by rural sales that grew by 5.8 per cent compared to the year-ago period; urban sales also grew by 3.2 per cent during this period.

However, in the July-September quarter, sales of FMCG items were impacted and were down 2.3 per cent year-on-year (Y-o-Y) driven by a decline in beverage and commodity sales, mainly during August/September months.

In the quarter ended September, rural demand witnessed a steeper drop of 3.1 per cent while urban sales were marginally down by 0.6 per cent.

“We see a recovery in seasonal rainfall and a normal monsoon for the season (June-Sept’23) which definitely has had a positive impact on rural growth,” Akshay D’Souza, chief of growth and insights at Bizom, told Business Standard.

He added that quarterly sales growth has been impacted mainly on account of Branded commodities and beverage sales being lower.

Among branded commodities, the retail intelligence firm said it saw a sharp drop in prices on a year-on-year basis which include edible oils. Beverage sales were impacted due to rains, that led to cooler temperatures.

“Homecare products have seen a rise in sales driven by increased availability whereas Confectionary and Packaged food product sales have seen heavier stocking shoring up sales,” D’Souza said.

He added, “As we build up to Diwali in Nov-23, we do expect FMCG companies to increase kirana stocking further this month in Oct-23. This is mainly to grow market share as they look to garner a higher share of the spike in demand during Diwali.”   

Consumer goods companies have also said in their July-September quarterly update that demand was witnessing a gradual recovery.  

Dabur India said in its pre-quarterly results update, “While FMCG consumption is showing YoY improvement, however the recovery has been gradual. The quarter witnessed a mild summer and a slightly deficient monsoon.”

The Ayurveda major also said that the festive season is later than normal this year due to which offtake related to festivals is delayed and will carry forward to the next quarter.

Marico also said in its pre-quarter results update that demand trends largely mirrored the trends observed in the preceding quarter.

 

“Instances of rising food prices and below-normal rainfall distribution in some regions seemed to impede the anticipated recovery in rural demand,” it said.