FMCG companies avoid early stock loading, bank on favourable summer for rebound

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• FMCG firms keep inventory low, await summer demand surge
• Companies plan new launches if weather boosts summer sales
• Last year's erratic weather led to excess stock and weak growth

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After last year’s erratic weather disrupted summer sales, India’s leading consumer goods companies are keeping inventory levels tight, with plans to release fresh stocks of products, ranging from talcum powder to cold drinks, only as temperatures begin to rise, top executives flagged in their post-earnings analyst calls earlier in the month.

The companies, including Dabur, Emami, Varun Beverages and Tata Consumer, are looking to roll out new products at attractive price points to avoid missing out on the opportunity, while they expect a double-digit growth from the summer categories if weather conditions remain favourable.

Last year, companies were left with excess inventory and negative growth after a shorter-than-expected summer disrupted demand and derailed their initial projections.

FMCG major Dabur, which sells cooling hair oils under Dabur Cool King and fruit juices and nectars under Real, said the  whole category should surge on the back of the category tailwind, given that the weather is favourable. In Q1FY26, the company had  seen -14 percent growth due to the unseasonal rains and extended winters.

"We are also keeping our fingers crossed on the beverage and juices business because the season did not favour us in the last summers. There were some stocks and we are in the process of liquidating all that stock in the marketplace, so that we start the new season afresh without old stocks.  The fourth quarter is going to be better because last year we did the loading and the season did not favour us. So, there were some stocks which came back to us. But this time, we haven’t done the loading and hence the anomaly is not going to happen," said Dabur's chief executive officer Mohit Malhotra.

Meanwhile, rival Emami, which sells cooling products, such as Navratna oil and talcum powders, hopes to start loading its summer products in the next 15-20 days, in a bid to capture demand as soon as the summers begin. However, the company is worried about extended winters in some of the states.

"The only caveat is winter is extended, and we have to get to the summer. Navratna Oil, Navratna talc and Dermicool are big summer brands, we have to load these three products in February and March.  The momentum looks good as far as the rural segment is concerned. Our dealers are holding very less stocks. So I don't see any reason that we can't build on the summer portfolio as soon as the season starts," said Mohan Goenka, Emami's Vice Chairman & Wholetime Director.

New launches

On the cold drinks' side, Varun Beverages is planning new launches in both flavours and energy as a category, according to managing director Varun Jaipuria.

"We have recently launched our mid-priced energy drink, Adrenaline Rush, a few months ago. Given that it was off-season, we will expand it now, and, of course, with PepsiCo, we are working on a very strong customer engagement plan as well, including some ATL (Above The Line) activities, " Jaipuria told analysts. He 103added that the company will launch Nimbooz Jeera range in March.

Nimbooz is growing very fast for us and is doing phenomenally well. We are planning to launch more flavours and price points in that. So, there is a lot of exciting stuff which is going to be there in the season," he added.

Meanwhile, another soft drink brand, Lahori Zeera, is planning to manufacture and produce at full capacity to meet peak summer demand, post February.

"Inventory levels naturally start tapering with the onset of monsoons around July. After the monsoon period, the focus shifts to clearing residual inventories across the supply chain, followed by replenishment based on fresh demand. Beverages remain a highly seasonal category—while overall volumes may be spread through the year, operational challenges and inventory levels fluctuate significantly with weather patterns," said Nikhil Doda, Co-Founder & Chief Operating Officer.

Echoing the uncertainty around summer forecasts, Tata Consumer CEO Sunil D’Souza said the company has shifted its focus from predicting weather patterns to strengthening execution and expanding its product portfolio.

'Stopping weather forecasting'

"I have stopped trying to forecast weather... We have ramped up our distribution and we should be in a good position.. whether it is sales force,  distributors or salesmen, because after that, the entire focus is on execution. So, if it is a good summer, we will ride it out. It is not a pricing-driven growth, it is a volume-driven growth," said D’Souza.

"You will see some more aggressive launches in this space in the next 60 days or so. We have started to build the whole stack of Ready-To-Drink tea and coffee, whether it is green tea, fruit tea, kombucha, Ready-To-Drink coffee, in a can for  Rs 70. We now have a PET at Rs 50, and high-end as well," he added.