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Consumer goods sales bounce back in July after second-wave hit

Consumer goods makers are witnessing a revival in demand that fell during the second wave of the Covid-19 pandemic when viral infections rose in rural and urban parts of the country.

The country’s largest consumer goods maker, Hindustan Unilever Ltd., said at a call after its earnings for the quarter ended June that demand has recovered gradually starting June and is now back at levels seen in March.

“Rural demand which was impacted during the second wave has recovered and is now growing ahead of urban,” Ritesh Tiwari, chief financial officer of HUL, said. “Demand from the modern trade channel was impacted due to restricted mobility.”

“On a sequential basis, FMCG sales in the three months through June fell 10.2% amid a drop in sale of discretionary products as restrictions impacted both availability and consumption of these products,” Akshay D’Souza, chief marketing officer at Mobisy Technologies Pvt., parent of retail intelligence provider Bizom, said. He said personal care and confectionary sales were impacted while essential products saw relatively better offtake during the quarter.

Dhairyashil Patil, president of All India Consumer Products Distributors Federation—an umbrella body representing traders—said while rural areas are leading the revival, demand in April-June was still lower than in the preceding three months.

Consumption started improving in July. Overall consumer goods sales, according to Bizom data, rose 1.7% between July 1 and July 21 compared with March 1-21 because of higher stocking by kirana shops or mom-and-pop stores. Average sales per kirana increased 8.3% during the same period even as the number of active such stores contracted 6%.

The active number of operational kirana outlets increased 17% month-on-month in July but was still lower compared with March, the Bizom data showed. Urban and rural consumption grew 39.4% in June over a month ago. Urban consumption jumped 63.2% and rural demand increased 32.8% during the period.

“We have now seen consumption in FMCG coming back to the levels that we saw in the quarter ended March,” HUL’s Tiwari said, adding rural areas have led the comeback.

Bizom data shows consumption of edible oil and grains is higher than March. Sales of these products jumped 59% month-on-month, with confectionery sales up 17% in July.

Mayank Shah, category head at Parle Products Pvt., said modern trade was far more impacted due to restricted hours. Sales of the company’s products at hypermarkets and supermarkets rose 25-30% month-on-month in June. General trade grew 10-15%.

Overall demand for the company in July is back at March levels or close to pre-Covid levels, Shah said. Bloomberg Quint


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