Growth prospects to get better: FMCG

The fast moving consumer goods (FMCG) sector is expected to witness a huge boost in consumer demand and greater uptrading (opting for higher priced products) as the Sixth Pay Commission would increase disposable income, say company heads. The key benefit would be higher spending power in the hands of government employees. This would arrest the downtrading happening in the sector due to inflationary pressures.

Hoshedar Press, executive director & president, Godrej Consumer Products (GCPL), said, “As a company, GCPL would look forward to improved spends translating into improved offtake and better growth rates for the categories we operate in.

The monthly improvement in remuneration would encourage them to spend more by either buying larger quantities of current items or upgrade to more expensive items or a mix of both. Thus volumes as well as values of category spends could improve.” Companies have been weary of slowing volume growth in all categories due to around 10 per cent price hike in all categories, including food and personal care products, in the last one year. The strategy of hiking prices and reducing the pack sizes had already hit volume growth for soaps and detergents.

Soap manufacturer GCPL hopes that increased consumer spends would result in higher volume growth. In detergents, consumers had also begun downtrading to lesser priced brands in the mass segment.

Dabur officials said, “We expect the wage hikes to limit downtrading that had begun to happen in the sector due to higher prices. Along with this, we expect health products and aspirational brands to also benefit from higher disposable income of consumers. It would lead to the addition of a large section of middle class people as buyers of aspirational brands. This would happen across the board, both in rural and urban India.”