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No respite soon for FMCG cos
Mint Mumbai
|February 26, 2024
For consumer staples companies, it will be a while before the choppy waters calm down. Not only is demand in rural markets weak but stress in the urban portfolio is an emerging worry.
Fast-moving consumer goods (FMCG) companies gave a muted volume show in the three months ended December (Q3FY24) despite it being a festival quarter.
Rural growth lags urban still. Overall, the FMCG industry volume was at 6.4% year-on-year in Q3 versus 8.6% in Q2, said Mihir Shah, a Nomura Financial Advisory and Securities (India) analyst, in a report. However, in absolute terms, volume consumption has remained at the same level for three quarters, said Shah.
Specifically, things were a tad different for Dabur India Ltd as it saw comparatively better rural demand. Still, this does not imply that a rural recovery is on the cards as Dabur owes it to distribution expansion.
In general, benign commodity costs meant more competition from local players in some categories. This means muted volumes coupled with price cuts impacted revenue.
This story is from the February 26, 2024 edition of Mint Mumbai.
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