FMCG major Marico on July 5 reported a volume decline "in mid-single digits" in its India business, as the sector continued to witness "tepid demand" as rising retail inflation exerted pressure on the share of the wallet.
Current trends indicate that consumers "titrated consumption" in some non-essential categories and either "down-traded among brands or switched to smaller packs" in the essential categories, said Marico.
"In the given context, India business volumes declined in mid-single digits. The performance was particularly dragged by a sharp drop in Saffola Oils. Excluding Saffola Oils, the India business posted marginal volume growth. Parachute Coconut Oil recorded a minor volume decline," said Marico in its quarterly update for Q1 FY23.
However, premium discretionary categories fared relatively better in the April-June quarter because of a lower base and lower consumption dip in the upper-income consumer segment. While, Marico’s international business maintained "strong momentum, delivering high-teen constant currency growth" and all markets exhibited strength and stayed on the path of sustained profitable growth, despite the prevailing global uncertainty and inflationary pressures.
The company expects "consolidated revenue in the quarter ended marginally higher on a year-on-year basis.". Its Gross margins are expected to expand on a year-on-year basis, but remain near the same levels as the preceding quarter, said Marico.
"Among key inputs, copra prices remained soft during the quarter. Edible and crude oil prices cooled to some extent towards the end of the quarter, but the company consumed higher cost inventory in this quarter," it said.
The update, which provides an overall summary of the operating performance and demand trends witnessed during the quarter, will follow detailed information once Marico’s board approves the financial results for Q1 FY23, the FMCG maker said. In the domestic market, Marico’s Value Added Hair Oils grew in low single digits in value terms despite weak consumer sentiment, especially in rural.
"Saffola Oils declined in double digits, having to contend with high in-home consumption in the base quarter and significant down trading visible from super-premium to mass segment in Edible Oils,” it said. The brand chose to maintain "threshold margins over volumes" in the face of "unprecedented raw material inflation, supply chain issues and the undesirable effect of price hikes" on the absolute outlay for the consumer, said Marico.
Its food segment also had a slow quarter due to a high in-home consumption base in oats and a sharp decline in immunity-led categories like honey, among others. "Premium Personal Care posted robust growth across all segments of the portfolio. Digital-first brands remained on track and met internal aspirations," it said.
Over the outlook, Marico said it maintains its aspiration of "delivering sustainable and profitable volume-led growth over the medium term".
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