FMCG Sector Readiness For Increased Sale This Indian Festive Season

Companies across the Fast-moving consumer goods sector have pinned their hopes on the festive season, which is going to be in a full-fledged manner after the pandemic shut India and the world for two years. A sales growth projection being shown is 10 per cent, to as high as 50 per cent, over last previous year’s festive season, and most firms state that the momentum is improving as compared to what was in 2019.

While festive season demand usually surges due to the positive consumer sentiment around it, the good news is that companies are hopeful of a scenario where there are no fresh disruptions to business, and the demand momentum continues to grow. The Indian diaspora is social by nature and the festive season adds lot of value to it. Indian households spend a lot more during these months of the year, especially since a huge section of the society saves year-long to spend lavishly during his time.

Sales of soaps to consumer staples declined in the months before the festive season since retailers tried to get done with the unsold inventory before stocking up, in the wake of inflation-led weakness in consumption. As per a report by Bizom, the value of FMCG industry contracted 9.6 per cent in September over August. It surged 8.1 per cent year-on-year but most categories, except for packaged goods and commodities like rice, wheat and edible oil, recorded a dip in sales. The Indian festive season this year kicked off in the last week of September.

Feeble demand in the hinterland has been a drag. Rural sales dropped 14.3 per cent whereas the the urban sales rose 1.1 per cent. Grocery sales rose 6 per cent in August, which reversed the consecutive month-on-month decline over the past three months. This happened due to the retailers stocking up in anticipation of pent-up festive demand. However, they are struggling with an inventory pile-up as consumers cut back on spending due to high prices. Sales of wheat, rice and edible oil dropped the most to reach 14-15 per cent among categories, closely followed by home care products, which were down 8.6 per cent. However, the consumption trend is predicted to improve from October. The reasons attributed to this are favourable monsoons and the post-pandemic fervour in people during this festive season.

“Recently Central Government declared DA hike for its employees which will soon be followed by State Governments and later by corporates. This will somehow provide immunity to purchasing power against inflation. Additionally, FMCG is prepared to play on volumes using offers on more consumption. Naturals, Greens, Specialisation and Price Points Estimation are new strategies for firms. Certain Natural and Greens attracted more than 60 percent fresh buyers. Detergent cakes reduced sizes from 150 g to 135 g and sold more. Rs 20 price point is the new hot cake,” stated Dr. Niranjan Shastri, Associate Professor, NMIMS, Indore to BW.

Shastri stated that marketing offers like Buy one Get One, Flat Discounts, Cashback Credit Card Offers, Lucky draws are all being used by this industry to attract a greater consumer base. “However innovative products on Green theme and health-first are under pipeline and will generate a lot of steam. Doorstep delivery, state of the art logistics, cost optimisation, ease of return etc. are contributing in value creation. This is about to ensure double digit growth for the sector,” added Shastri.

“There is a strong correlation between the Indian Festive Season and increased disposable income in the hands of the consumers which leads to a higher propensity to spend more. Such a consumer behavior leads to spends on durables, apparels along with the regular and premium FMCG required by the household. We observe a spike in sales of packaged foods particularly. Gift packs of all kinds, salty snacks, biscuits, sweets, and cakes drive sales during the festive period lasting till Christmas and New Year,” Krishnarao Buddha, Senior Category Head, Parle Products told BW.

Most FMCG brands have taken the necessary corrections with the severe inflation during the past six months. The prices of most of the input prices are benign now and brands are planning to give consumer offers to gain extra sales. Some brands may plan to roll back the price hikes. There will be an increased intensity of advertising to increase consumer pull and trade activities for the push as well.

In a conversation with BW, Mayank Shah, Senior Category Head, Parle Products stated, “Parle expects 10-15 per cent year-on-year growth in sales during this year’s festive season, a momentum that has been built since the beginning of August with more people moving out of home to celebrate the festive season in full fervor. We expect demand to remain robust throughout the remaining year. We are optimistic about this festive season and are expecting the growth rate to be around 11-13 per cent for our food and other allied categories while anticipating around 8-9 per cent growth in the overall FMCG segment.”

This festive season, brands across all spectrums are exploring several ways to draw in consumers. One of the ways to bring new offerings for consumers is brand collaboration. “We at Parle Products have also done two such special brand collaborations. The first is the ‘Geniously Sweet Collection’ in partnership with Bombay Sweet Shop wherein we have co-created an exclusive range featuring Parle G Fudge and Chai Biscuit Choco Barks. The unique collection is a perfect union of the classic and contemporary, bringing Parle G to consumers in a whole new avatar,” Shah added.

He also stated that, additionally, it makes for a thoughtful, indulgent gift for a loved one. “The second collaboration is about Parle G merchandise in association with Redwolf, which is an indie clothing label. This range is specially released for all Parle G lovers who have a high nostalgic connection with the brand. The merchandise collection is an extension of the love that the brand has received from consumers over the decades,” said Shah.

FMCG firms have increasingly tied up with e-commerce platforms like Amazon, Flipkart and quick commerce platforms like Swiggy, Instamart, Zepto, Dunzo etc. to ensure quick and expansive delivery across all locations throughout the country. With the higher proliferation and deeper penetration of these platforms to tier 2 and 3 regions across India, the industry is making full use of the trend of online shopping to boost sales this festive season.