Consumer cos see green shoots in rural belt

Consumer cos see green shoots in rural belt

Kolkata | New Delhi | Mumbai: Consumer goods companies saw green shoots in rural India in February with volume sales growth for many firms, raising hopes of a full recovery for the worst-affected market during the Covid-19 pandemic, said industry executives. Volume indicates actual consumption or number of products people put in their shopping basket.

The rural fast-moving consumer goods (FMCG) market by value grew at more than double the pace of the urban market in February, showed latest data by retail analytics platform Bizom, reversing the trend of the past five months when urban markets drove the growth. Rural sales surged nearly 35% month-on-month and more than 12% year-on-year, after consecutive decline since August last year.

Packaged foods such as biscuits and edible oils saw a 4-6% year-on-year volume growth last month, said the executives, while the discretionary segment, including appliances, grew 4-5% month-on-month in smaller towns.
The pace of sales decline for entry-level refrigerators halved to 2-3%.

‘Summer may Boost Demand Further’
“Sentiments and volume sales are turning positive in rural (India) after the heatwave abated in the later part of February… farmers are expecting a good harvest and increase in minimum support prices by the government for most agri-commodities,” said Mayank Shah, senior category head at Parle Products.

Godrej Appliances business head Kamal Nandi said the high temperatures during most of February drove the sale of air-conditioners, leading to segment growth both on a year-on-year basis and over the pre-Covid-19 period.

“We expect entry-level refrigerators to also bounce back to volume growth in March, when these products would become a necessity,” he said. Rural demand has revived after more than six quarters in most segments, which were initially affected when consumers suffered earnings loss due to the pandemic and were subsequently hit by record high inflation since last year. These segments have seen some improvement in consumption since January, when sales were either flat or the rate of decline slowed in tandem with the decline in inflation

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