Slow Q2 growth for FMCG companies as food prices and rain deficit block demand

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FMCG new packs clog supply chains, say distributors Regarding gross margins, these companies express the expectation of sequential improvement, supported by moderating inflation and a slowdown in price increases. This positive trend enables them to allocate higher budgets for Advertisements and Promotions (A&P). Providing an update on its performance for the September quarter, GCPL stated, "In India, we experienced weak macros and adverse weather conditions during the quarter." Despite facing a "tough operating environment," the Godrej Group's FMCG arm achieved "mid-single digit volume growth" in its organic business.

Marico, the owner of brands such as Parachute, Saffola, and Hair & Care, noted that demand trends in the second quarter of FY24 closely resembled those of the preceding quarter. The company mentioned challenges such as rising food prices and below-normal rainfall affecting the expected recovery in rural demand. In this context, domestic volumes grew in low-single digits year-on-year (YoY).

Marico continued to observe "healthy trends" in offtakes, market share, and penetration across key franchises. The newer portfolios, including foods and premium personal care, remained on track to meet full-year goals. Also Read: A ₹10 Maggi isn't what it used to be.

Neither is the sachet economy. Dabur India reported that FMCG consumption is showing YoY improvement, albeit at a gradual pace. The company attributed this to a mild summer and slightly deficient monsoon in the quarter.

Due to a delayed festive season, offtake related to festivals is postponed and will extend into the next quarter. Dabur expects its consolidated revenue to achieve mid to high single-digit growth in Q2. Nuvama Institutional Equities Executive