Consumer Firms Bet On Winter Lotions To Honey To Beat Demand Slump
Sales of skin care products rose 27%, aiding the growth of the personal care segment. Other categories, however, saw poor offtake.
Fast-moving consumer goods sales fell in November as festive demand spike didn't last and retailers were exhausting existing inventory. Except for moisturisers and winter consumables as temperatures drop in the north.
Sales of soaps-to-staples declined 15.3% last month over October and fell 2.7% over a year earlier, according to data sourced from Bizom. The retail intelligence firm attributed it to inflation and lower stocking by brick-and-mortar stores as demand failed to sustain after the festive season in parts.
The winter portfolio, however, is witnessing a pick-up, with retailers predicting higher consumption driving overall sales. Personal care products including skin cream and immunity products such chyawanprash and honey were in demand in November.
On the other hand, the commodity basket—including edible oil and pulses, home care, packaged goods, beverages, and confectionary—fell, according to data from Bizom platform that tracks 75 lakh kirana stores across the country.
"Sales of personal care rose, driven by the stocking of winter products," said Akshay D'souza, chief of growth and insights at Bizom. "As winter chills increase this month, we expect stronger demand for winter products."
"While these are still early days of winter, the demand for our winter portfolio is steady," Adarsh Sharma, chief operating officer of Dabur India Ltd., told BQ Prime. "If it turns out to be a good winter, we should see demand accelerate further."
The company has ramped up production of honey, chyawanprash, and the "Gulabari" winter range.
This year, the winter season or the December to February period is going to be colder for parts of southern India while it is going to be warmer for the northwest and northeast India, according to the seasonal outlook for temperature and rainfall published by the India Meteorological Department on Dec. 1. Delhi, known for its frigid winters, saw the temperature drop to 8 °C on Tuesday.
Vinod Rao, president, sales-consumer care division, Emami Ltd., said: "We expect our winter brands to perform well as the winter season kicks in and temperatures across the country begin to drop."
The owner of the Boroplus brand is witnessing higher momentum in its low- and mid-priced packs and Rao expects these stock-keeping units to drive demand.
Overall, however, the demand pickup is still slow with companies like Britannia Industries and Godrej Consumer Products projecting volume recovery to take at least another 2-3 quarters and until then the growth will continue to be price-led.
Parle Products senior category head Mayank Shah also told BQ Prime that that the industry remains "concerned" about how to drive volume growth.
"It is not because of tepid demand but rather because the pack sizes were reduced significantly to offset inflationary pressures," he said.
Now inflation has softened a bit, but Shah said, the net material inflation for Parle is still 4-5% higher. "Though edible oil prices have come down, other commodities like wheat and sugar remain inflationary," he said, ruling out possibility of any price cuts or increasing grammage for now.
Dabur's Sharma said rural demand continues to lag urban. Bizom data shows that rural demand dipped 17% in November while urban fell 10%.
"Although structurally we are not seeing a recovery in rural demand, demand should look optically higher in the second half on account of the soft base in the first half," said Abneesh Roy, executive director of institutional equities at Nuvama Group. Yet, a harsh winter and softer general inflation can lead to a gradual recovery in rural demand, he added.
Dabur, Hindustan Unilever, and Emami will benefit as consumer demand for winter products starts picking up, said Roy.
The CEO of Patanjali Foods Ltd., Sanjeev Asthana, told BQ Prime that he expects the third and fourth quarters of the ongoing fiscal to be "robust" demand-wise for both edible oil and the food business, riding on peak wedding season, softening of prices, a good harvest and government interventions putting more money in the hands of rural households.
The company is seeing "green shoots" of rural revival so far in December.
Parle's Shah, too, expects January-onward things to begin look "promising".