Mint Explainer: Why FMCG companies expect subdued volume growth in Q2
Fast-moving consumer goods (FMCG) majors such as Marico Ltd., Godrej Consumer Products, and Dabur India Ltd. released their quarterly business updates, providing insights into demand trends. While signs of demand improvement were evident, companies highlighted challenges such as rising food prices and uneven distribution of rainfall, which hampered rural demand recovery.
The consensus points towards a modest volume growth. In the September quarter, most firms reported subdued volume growth. Marico, a prominent hair oil manufacturer, found demand trends consistent with the previous quarter, pointing to various climatic and economic impediments that stymied rural demand revival.
GCPL highlighted weak macro conditions and adverse weather during the same period. Dabur, known for its Vatika shampoo, acknowledged a year-on-year improvement, but said recovery has been "gradual". "This quarter witnessed a mild summer and a slightly deficit monsoon.
Festive season is later than normal this year due to which off take related to festivals is delayed and will carry forward to the next quarter," Dabur said in a filing to the stock exchanges. Marico's report revealed low-single-digit domestic volume growth year-on-year, with low single digit volume growth in Parachute coconut oil and Saffola edible oils, and low single-digit value growth in value added hair oils. "Consolidated revenue was marginally lower on a year-on-year basis, dragged by pricing corrections in key domestic portfolios over the last 12 months, which will progressively come into the base going ahead," the company noted.
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