FMCG demand sluggish in urban India on account of food inflation, commodity costs: Nestle chairman
Urban India is under some strain as demand continues to be muted amid surging food inflation, packaged foods maker Nestle India’s chairman Suresh Narayanan said at a media briefing on Tuesday at the company’s infant foods plant in Samalkha.
He said there are “some pressure points from mega cities and metros" though tier one and below towns and rural markets seem to be reasonably stable. “The FMCG sector is facing sluggish demand with growth declining to 1.5-2 per cent compared to double digit growth a few quarters ago,” Narayanan said.
The maker of Maggi noodles, KitKat chocolates and Nescafe coffee, reported a marginal 0.94% year-on-year decline in net profit for the July-September ’24 quarter, down to Rs 899.49 crore, hurt by softer demand and high commodity prices. The India unit of the Swiss foods company had reported net profit of Rs 908.08 crore in the year-ago quarter.
Narayanan called out the surge in prices of fruits, vegetables and edible oils as “cause for concern because this clearly will lead to an increase of prices if they become unmanageable for organisations.”
Prices of vegetables such as tomatoes and onions shot up to 35.9% in September over the previous month, impacted by heavy rains and supply-disruptions. The recent hike in import duties on crude and refined edible oils by 20 percentage points last month pushed India’s retail inflation to a nine-month high of 5.5% in September, against 3.65% in August.
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