The creeping demand slowdown has gripped the fast-moving consumer goods (FMCG) sector as consumers continue to cut back on purchases, including of entry-level products, according to a report in Business Standard.
The report cited Nielson data, which found that categories with a high contribution of small packs such as shampoos, soaps, chips, biscuits, toothpaste, etc, (Rs 5, Rs 10) have seen decline in sales compared to last year.
In biscuits for example, small packs contribute to more than two-thirds of all sales, but saw a decline of 5 percent for the January-June 2019 period, compared to the past year, it noted.
Small packs in fact contribute to 80 percent of all chips sales. For the period, the slump has been 3 percent, at 15 percent compared to the past year’s 18 percent. In the toiler soaps category, where one-fourth of the sales are small packs, the growth has been flat against 3.3 percent in the year-ago.
"The slowdown is getting worse. Overall, the growth rate of biscuits has declined to levels of 2-2.5 percent in Q1 April-June 2019," Mayank Shah, Category Head of Parle Products, told the paper.
He added that GST of 18 percent on the segment has been the biggest contributor to the downturn.
Britannia Managing Director Varun Berry said, "This slowdown has taken the biscuit category growth to 2 percent in Q1.”
Godrej Chairman Adi Godrej and Marico Chairman Harsh Mariwala had also pointed out that the government should focus on economic revival at a time when the RBI cut the FY20 GDP growth rate to by 0.1 percent to 6.9 percent.
Godrej and ITC Chairman Sanjiv Puri met Finance Minister Nirmala Sitharaman in July to discuss an outreach programme to tackle this slowdown.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
