What do FMCG companies have to say about rural demand?

Most companies indicated sluggish rural demand in the September quarter, which impacted their quarterly business. However, most expect some recovery in demand in the second half of the financial year.

Commenting on demand in rural and urban markets, parachute oil maker Marico Ltd said divergence in rural and urban growth prevailed during the quarter due to persistent inflation and liquidity pressures from the former. For the September quarter, the company reported 3% year-on-year growth in domestic volumes.

Late last month, domestic FMCG company Dabur said the economic environment remains “challenging”; This affected the purchasing power. “The impact of inflationary pressures was more pronounced in rural markets for the first time with demand growth in backward areas in urban markets. However, in five quarters, we remain optimistic of rural demand reporting a smart recovery in the coming quarters and We are investing ahead of the curve to ride this demand recovery by expanding our rural footprint by adding around 9,000 villages in the second quarter of 2022-23. Mohit Malhotra, Chief Executive Officer, Dabur India said, ” Take our total coverage to over 100,000 villages.”

Meanwhile, the country’s largest packaged consumer goods company said that higher inflation in rural areas suggested that inflation in rural areas is decreasing as compared to urban. “And that the effect of inflation is seen in the decline in market volumes in rural and hence overall price growth of rural remains muted. So, it spins out. Of course, as far as Hindustan Unilever is concerned, we have achieved a wide market share in both urban and rural areas, but overall, what happens in terms of the growth market,” the company’s CFO Ritesh Tiwari said during a post. Where – Earning call on October 21.

Overall, for the FMCG markets, volumes continue to decline in both urban and rural markets with a higher decline in rural areas, the company said. HUL reported 4% year-on-year growth in volumes in the September quarter.

Tiwari said as the broad basket of commodities cools, the way vegetable oil does, that should help bring down prices. “And if it helps in bringing down the prices, it will be good for consumption,” Tiwari said.

Meanwhile, both Marico and HUL said they expect recovery in the coming quarter.

Tewari said, “The good news is that urban employment is on the rise, which means rural migration and non-farm income will increase and hence money will come back to the rural sector and hence the rural economy will have more money in pocket- This augurs well,” Tiwari said. added.