FMCG: The Big, Fat Shopping Bag
Fast moving consumer goods (FMCG) companies are planning to retrieve sales in a year dampened by the goods and services tax (GST) rollout in July, a month earlier to the upcoming festive months that begins with Onam in August. But big FMCG players such as ITC, Dabur, Marico, Nestle, and confectionary brands such as Ferrero Rocher, Mondelez India are all geared up for the festive season, expecting sales growth of 15-20 per cent. That will mark a return to double-digit growth for the first time in at least four quarters.
Expenditure on consumer promotions would increase by 15-20 per cent in the September-December period from the year earlier in expectation due to an upbeat consumer buying sentiment. “We have seen that consumers interact with the brand during festivals like Navratri and Diwali and, therefore, we step up our marketing initiatives at this time,” says Anuradha Aggarwal, Chief Marketing Officer, Marico.
FMCG companies have not increased the prices of their products despite the GST. So, they expect a good volume growth of 15 per cent. “We have doubled our marketing spends these months and have seen an increase in sales of milk powder, ice-cream and sweets,” says R.S. Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation (GCMMF).
Food items apart from the traditional sweets like juices, chocolates, confectionaries are popular items of sales especially in bigger cities. “Like we have seen this entire year, the chocolate category continues to grow at 12.4 per cent as the data from Nielsen suggests and this, we see no reason for a slowdown this festive season,” says Prashant Peres, Director, Marketing (Chocolates), Mondelez India. “Our objective of occasion-based marketing is only to boost sales,” he adds.
Mondelez India, says Peres, has seen a significant increase in rural consumption, and has, therefore, strengthened its footprint in rural India. Another change in the route to market dynamics is the emergence and growth of e-commerce as a channel to cater to the gifting needs of consumers. It has partnered with Amazon.in, setting up India’s first virtual chocolate and sweet store, which will help to up their distribution and sales. The sharpest rise will likely be in select categories such as large packs of biscuits, chocolates, juices and gift packs of personal care products.
A spokesperson for confectionery maker Ferrero India, whose products have become Diwali gift hampers, says the company plans to offer new products. “Ferrero Rocher has seen a steady growth for the past two years and we expect the same this festive season,” he says.
Innovative product portfolio and packaging will lure not only shoppers but will benefit manufacturers and retailers. ITC has crafted gift hampers for Fabelle, the luxury chocolate offerings. ITC’s B Natural has also crafted a special festive pack. Another FMCG biggie Godrej Industries is expecting a 30 per cent growth this festive season.
Boon For Retailers
With retailers such as Big Bazaar, Pantaloon expecting growth at 20 per cent this season, festive time is a win-win situation both for retailers and shoppers. Big Bazaar and Pantaloon stores across over 70 cities and rural locations, believe that the market has improved a lot particularly in the furniture and electronics segments and are expecting a 35-40 per cent growth across segments.
Samsung is expecting sales surge by 25-30 per cent this festive season on smartphones ranging from Rs 10,000-20,000. “The festive season is a great occasion to showcase your brand and its offerings. We expect this festive season to fetch us 20 per cent of our revenue,” says Satish Matey, Director, Marketing, Livpure. The digital space is gaining traction and Livpure has upped the spends in digital to 15 per cent of the total advertising budget.
Last year, the consumer durable market saw a growth in demand from the rural-urban segment – tier 2/3 towns. Several factors such as good monsoon, 7th Pay Commission, increase in disposable income and high penetration level of goods resulted in rise in demand for goods from these areas. As 60 per cent of the consumer durable sales mostly happen during the second half of the year, the industry is pinning hopes on the festive period.
“We aim to grow by 30-40 per cent by end of this festive season,” says Manish Sharma, President & CEO, Panasonic India & South Asia, Panasonic Corporation. Panasonic’s marketing spend this time would be 15-20 per cent more than last year. “This season we are also expecting good growth in kitchen appliances, beauty care and wellness products such as air and water purifiers,” adds Sharma.
