FMCG rebounds in Q1, lifted by tax rebate, rural demand

Hindustan Unilever Ltd announced a 4% volume growth in the June quarter, citing government incentives

- Suneera Tandon

India's consumer goods companies saw their volumes increase during the April-June period, as the government's move to ease tax burden and increase the floor price at which it buys agricultural produce from farmers lifted demand for goods—from chips and cheese to lotions and nail polish.

To be sure, companies' own efforts such as direct distribution, and softening inflation across some key raw materials such as tea, coffee, copra also helped boost sales.

In an interview with Mint on Tuesday, Marico Ltd's managing director and chief executive Saugata Gupta said its internal efforts to expand direct distribution also helped lift demand in local mom-and-pop stores that continue to be impacted by the growing popularity and penetration of e-commerce.

"Rural has been reasonably stable; urban is improving. Some of the demand pressures on urban middle class have softened. It's a combination of food inflation being good, but we have to track the real income wage growth," he said.