Rural demand trends have improved, say FMCG CEOs, bet on monsoon to aid growth

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Marico Ltd said during the company’s post-earnings call on Monday. The Parachute hair oil maker on Monday reported a 4% increase in domestic volumes, as consolidated revenue rose 7% year-on-year. For the quarter ended 31 March, the company had alluded to a “visible uptick" in rural demand albeit towards the end of the quarter.

Gupta expects volume growth trends to "sustain", aided by stable retail inflation, a healthy progress of the monsoon and the government's budgetary allocation towards boosting the rural economy. "That being said, elevated food inflation and spatial distribution of rainfall will be key factors to be monitored," said Gupta. Last week, Vatika shampoo maker Dabur India reported a sequential recovery in volume growth in the June quarter, driven by growth in the rural markets.

"The FMCG sector has demonstrated a gradual pickup in rural markets in the past two quarters, despite encountering challenges such as unprecedented heat waves and high food inflation. However, timely arrival of monsoons coupled with rural-centric markets with a focus on rural infrastructure, agriculture and employment is a positive for the sector," Mohit Malhotra, Dabur's chief executive officer said during the company's post-earnings call on 1 August. The company’s India FMCG business posted a volume growth of 5.2% in the June quarter.

Several companies that draw a large chunk of their business from rural markets have been hinting at a revival in rural demand in the latter half of the March quarter. However, several firms sound bullish about a rural comeback in the June quarter. In the March quarter, NielsenIQ (NIQ) highlighted a “gradual uptick" in rural consumption that surpassed urban consumption in the March quarter, it said