What Q2 numbers say about FMCG health? Costs, quick commerce surge and climate hit
ET Intelligence Group: Consumer companies — HUL, ITC, Tata Consumer Products, Nestle India, Colgate Palmolive, Godrej Consumer Products and Varun Beverages — have announced their September quarter performance. Those such as Dabur and Marico have shared an update on their quarter performance. Others such as Zomato and Pidilite having large B2C business have also announced their latest quarter results.
SUBDUED CONSUMER DEMAND DID NOT IMPACT ALL While the topline performance of companies such as Dabur, HUL and ITC was impacted by the moderation of consumer demand – especially in urban India, it was not so in case of others like Varun Beverages, Godrej Consumer Products (India business), Colgate Palmolive (India), Pidilite and Zomato.
INPUT COST INFLATION ATE INTO THE PROFITABILITY Raw material cost inflation was a common factor that impacted profitability across companies. Rising prices of agri items such as edible oil, palm oil, copra, tea, salt, leaf tobacco ate into the operating margins and could not be fully passed on to the consumer amidst a subdued demand environment. For instance, in the case of ITC, the raw material cost as a proportion of sales rose to 44.6% in the September quarter from the year ago level of 40.2%. This resulted in a 330 bps drop in the company’s operating profit margin.
QUICK COMMERCE CHANNEL CONTINUES TO GROW THE FASTEST
Quick commerce as a subset of ecommerce continued to gain ground as the channel of the future. For instance, Zomato-owned quick commerce delivery platform Blinkit
