FMCG major Parle Products, the maker of Parle-G and Hide & Seek biscuits, has reported a rebound in rural demand as the third wave of the pandemic waned and consumers started limping back to normal in January.
“Rural demand is making a comeback. We have seen a rising trend since January. Consumers are more inclined towards purchases now. Consumption is coming back to its usual pace, with more demand than previous quarters. With the third wave gone, people are moving out of their homes and working like before. This is sure to give an impetus to an otherwise stagnant market,” said Mayank Shah, senior category head at Parle Products.
Data from retail intelligence platform Bizom also showed early trends of revival in February. In the first 15 days of February FMCG companies clocked sales value growth of 0.7 percent over the same period in January. Sales at kirana or neighbourhood stores rose 4.2 percent in the period under review.
In urban India, sales growth in value terms remained low despite showing improvement, Shah said.
He pointed out that urban value growth was positive despite a fall in volume growth.
“While price hikes have resulted in double nominal growth, there is a drop in volume growth for the industry. The volume has also shrunk due to labour forces migrating back to cities after the third COVID wave," said Shah.
Like most consumer goods companies, Parle Products had hiked prices by five to seven percent in the quarter ended December and had plans to undertake another round of hikes in the current quarter to pass on higher raw material costs that were biting margins.
Consumer goods companies such as Hindustan Unilever, ITC, Dabur, and Marico have been juggling with dual challenges of inflation and subdued demand in rural India. To offset input costs, the firms have undertaken a series of price hikes in the last few quarters. Hindustan Unilever raised prices in the range of 4-22 percent across its portfolio, Dabur about four percent, ITC 7-10 percent and Godrej Consumer Products 9-10 percent in FY22, and indicated they might have to increase prices further.
Rural demand remained resilient till the second wave of the pandemic but took a hit in the second quarter of FY22.
“Though headline value growth is still there in rural India, volume growth has turned negative,” Hindustan Unilever CEO and MD Sanjiv Mehta had said in January. The company reported volume growth of two percent in the quarter ended December owing to tepid sales in rural areas as compared to four percent in the previous quarter.
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