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Monday, June 17, 2024

Cookies, chocolates, and biscuits: FMCG home consumption paints a mixed picture

<p>Businesses that manufacture instant coffee (Nestle), chocolates (Mundelez), biscuits and cookies (Brittannia, ITC, and Parle Products), and fabric softeners, insecticides, and washing solutions (Godrej Consumer) have all been growing rapidly in the last several quarters. For good reason, they are expanding their distribution networks, introducing new items, and investing in more capacity.</p>
<p><img decoding=”async” class=”alignnone wp-image-509506″ src=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-cookies-chocolates-and-biscuits-fmcg-home-consumption-paints-a-mixed-picture-fmcg–750×422.jpg” alt=”theindiaprint.com cookies chocolates and biscuits fmcg home consumption paints a mixed picture fmcg” width=”995″ height=”561″ title=”Cookies, chocolates, and biscuits: FMCG home consumption paints a mixed picture 9″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-cookies-chocolates-and-biscuits-fmcg-home-consumption-paints-a-mixed-picture-fmcg–750×422.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-cookies-chocolates-and-biscuits-fmcg-home-consumption-paints-a-mixed-picture-fmcg–768×432.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-cookies-chocolates-and-biscuits-fmcg-home-consumption-paints-a-mixed-picture-fmcg–390×220.jpg 390w, https://www.theindiaprint.com/wp-content/uploads/2024/03/theindiaprint.com-cookies-chocolates-and-biscuits-fmcg-home-consumption-paints-a-mixed-picture-fmcg-.jpg 1024w” sizes=”(max-width: 995px) 100vw, 995px” /></p>
<p>According to Kantar Worldpanel statistics, household consumption for the six categories stated above witnessed a notable increase in calendar 2023 compared to the previous year, mostly due to sustained urban demand. However, there is more to the tale.</p>
<p>Fifty percent of the more than ninety categories that the market research firm was monitoring saw a decrease in demand in 2023. According to Kantar Worldpanel statistics, this includes areas like cooking oils, where household consumption decreased by 1.4 liters; washing powders, where household consumption decreased by 300 grams; basmati rice, where household consumption decreased by 180 grams; and salt, where household usage decreased by 80 grams.</p>
<p>According to the market analyst, the tendency is still there in 2024 since people are spending more money on wants than needs.</p>
<p>Think about this: In 2023, instant coffee experienced an 11% rise in expenditures and a 5% increase in consumption; chocolates saw a 32% increase in expenditures and a 30% increase in consumption; and families spent 20% more on pesticides, which contributed to a comparable (20%) increase in consumption.</p>
<p>“The disparity between urban and rural demand has contributed to the uneven consumption of FMCG among households,” states Krishnarao Buddha, senior category head at Parle Products, one of the top biscuit manufacturers in the nation. “Demand in rural areas has been low. Conversely, he said, “urban demand has improved, which has resulted in good growth for discretionary products.”</p>
<p>According to NielsenIQ and Kantar’s respective FMCG outlooks for 2024, the market will slow down for the most of the year before picking up steam in the December 2024 quarter. Additionally, according to NielsenIQ, there has been a sequential drop in FMCG value and volume growth, which was seen in the quarter ending in December 2023. According to it, there is a growing convergence in the increase of urban and rural volumes.</p>
<p>However, Varun Berry, the MD and vice-chairman of Britannia, said on a recent earnings call that the company’s urban growth was surpassing its rural development. According to Berry, “this is reflected in our premium portfolio, which is performing well in comparison to our value segment, which is facing pressure due to lagging rural demand.”</p>
<p>During a media roundtable last month, Nestle India’s MD and chairman, Suresh Narayanan, said that the demand for “common man” or basic goods was lower than that of discretionary ones.</p>
<p>“If you are a mainstream product, you have to deal with the unpredictable mix of rising food prices and job losses. However, he said that discretionary goods are performing better.</p>
<p>Because of the polarization of consumer demand, Nestle has decided to continue investing in the Indian market because of the urban bias of its goods, according to Narayanan. The company that produces KitKat chocolates, Maggi noodles, and Nescafe instant coffee is set to spend Rs 6,500 crore over the course of five years to expand its capacity. This is the largest investment the company has made in this time span, according to Narayanan.</p>
<p>Over the next five years, Godrej Consumer plans to spend Rs 515 crore in Tamil Nadu to establish a new manufacturing facility. In addition to improving inventory management and expediting GCPL’s delivery schedules, the factory will increase the company’s access to markets in the south.</p>
<p>According to Sudhir Sitapati, MD & CEO of GCPL, “it will act as a manufacturing hub for a wide range of our products, such as Cinthol and Goodknight and bolster our market presence.” In addition, the business recently introduced “Godrej Fab,” a new brand of liquid detergent, to the southern markets for Rs 99 per litre. In the last few months, Goodknight Agarbatti has helped the company break into the Rs 1,200-crore anti-mosquito incense stick market.</p>

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