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Coronavirus impact | With fall in consumer spending, alcohol and cigarette companies likely to face major challenge

Due to social distancing norms, the lockdown and expected decease in consumer spending, alcohol and cigarette companies are likely to face a major challenge moving forward.

April 29, 2020 / 10:11 AM IST
Representative image

Representative image

Indian consumers are expected to spend cautiously this year due to the economic impact of the novel coronavirus pandemic. That, coupled with social distancing norms becoming the new normal, and with more time to pass before restrictions on pubs and restaurants are significantly eased, liquor and cigarette companies are set to face a major challenge.

According to industry executives quoted in a report by The Economic Times, there were no sales of the two categories in April due to government prohibition.

This compares against a 9 percent sales growth for liquor and 2 percent for cigarettes during the same period in 2019.

The report cites executives as saying that there may be an initial surge in sales as soon as the nationwide lockdown is lifted as some consumers would stock up. However, this surge will not be enough to match the sales lost in May. In fact, the sales would remain significantly lower.

According to an online survey conducted by Nielsen India during April 10-14, 42 percent respondents said they will spend less on alcohol products and tobacco in the coming months.

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During his interaction with Chief Ministers via a video conference on April 27, Prime Minister Narendra Modi indicated that the lockdown will continue in hotspot areas of the country.

It is widely expected that the Centre is unlikely to ease restrictions related to the sales of liquor and cigarettes in such areas.

The report adds that ITC and Godfrey Phillips India have suspended production and distribution of cigarettes since the lockdown began in March.

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Moneycontrol News
first published: Apr 29, 2020 10:11 am

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