FMCG sales taper off in August after surging in July

Sales of fast moving consumer goods (FMCG) declined sequentially in August as compared to July as general trade stores continued to liquidate the excess stock from the previous month. According to data from the retail intelligence platform, the industry sales declined by 14.5 percent in August month-on-month. Monthly sales per active kirana during the month also dropped by 16.4 percent, showed the data.

The months of June and July, as per the retail intelligence platform, witnessed heavy stocking of products in kirana or general trade stores across the country as companies tried to capture the latent consumer demand with the subsiding of the second wave of the COVID-19 pandemic.

“Many companies in an attempt to leverage Independence Day pushed stocks heavily to kiranas and Modern trade outlets,” said Akshay D’Souza, Chief of Growth and Insights, Mobisy Technologies, which owns Bizom.

Hence, while the sales were up in the first half of August, they tapered towards the second half as stores liquidated the excess stocks available with them, he added.

The active kirana growth, however, which indicates the number of transacting retailers month-on-month, rose by 1.7 percent.

“The August sales are significantly higher than the same time last year driven by a much higher universe of kirana stores that are doing business now. This is a great fundamental growth driver and will continue to be a key enabler of strong growth for the industry,” said D’Souza.

Packaged foods remain in demand

Most categories in the FMCG segment reflected the trend and their sales declined in August, except for packaged foods, which continued the growth trajectory and registered a sales jump of over 8 percent during the month, as per the data.

The packaged food and confectionaries, data revealed, also saw the highest increase in placement across general trade stores and witnessed about 7.5 percent rise in active kiranas in August.

Packaged foods have witnessed massive growth since the onset of the pandemic with a decline in out-of-home consumption.

The essential categories such as personal care (-7 percent), homecare (-7.9 percent), and commodities (-24.7 percent) declined during the month. The sales of the non-alcoholic beverages category, which has seen a recovery of late after a heavy blow from the first wave of the COVID-19 pandemic, dropped again with the end of the summer season.

Companies such as Dabur, Tata Consumer Products, reported growth in the beverages category in the first quarter of the financial year 2022.

Dabur’s food and beverage category reported 80 percent year-on-year (YoY) growth in the first quarter ended June. The company’s CEO, Mohit Malhotra, said growth was driven by the strong performance of Real Fruit Juices, especially, 1-litre packs, which are used for in-home consumption. The company has also extended the category with the launch of carbonated variants under the brand, expanding its total addressable market and helping growth.

Tata Consumer Products, similarly, registered 28 percent growth in its India beverages category, including NourishCo, which makes bottled water and non-carbonated beverages such as Himalayan mineral water, Tata Gluco Plus, and Tata Water Plus.