FMCG growth slows as high rentals & lower wage hikes weigh on U=urban demand: Britannia
Britannia Industries executive vice-chairman and managing director Varun Berry said metropolitan cities dragged the overall fast-moving consumer goods (FMCG) market in the previous quarter amid surging housing costs and lower wage growth.
Consumers in metro cities contribute about a third to the urban market for the FMCG sector, but they accounted for 2.4 times to the slowdown, said India's biggest biscuit maker by value.
«The housing cost in urban and especially in metro areas is about 22% of the total consumer price index (CPI) basket rate and we know that in real estate, the prices have gone up, the rentals have gone up and that's creating stress for most consumers in large cities and metros,» Berry told analysts on an earnings call. «Non-salaried have seen nominal increase in earnings over the last 12 months at 3.4%, while the salaried class has their earnings… up by about 6.5%. So, there's stress in almost 51% of the workforce sitting in urban areas. That is the double whammy, which is creating a demand shortfall as far as urban and especially metro is concerned.»
On Monday, Britannia reported a 5% year-on-year increase in revenue, with 8% volume growth, for the quarter ended September. The maker of Good Day and Marie Gold said it will increase prices by 4-5% in the next two quarters to offset rising input costs.
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