FMCG companies see some respite in rural demand in last two weeks

While it is too early to say that rural demand has revived but this is the first time demand for consumer goods have witnessed green shoots

FMCG Sector, FMCG Stocks, FMCG Companies

3 min read Last Updated : Dec 31 2022 | 1:30 AM IST

Fast-moving consumer goods companies have started to see some respite in rural demand in the last two weeks which has otherwise been under stress for the last 18 months.

While it is too early to say that rural demand has revived but this is the first time demand for consumer goods have witnessed green shoots.

“The first fifteen days of December were slow, but we have witnessed a pick-up in consumption in the last fifteen days of the month,” said Angshu Mallick, CEO of Adani Wilmar, told Business Standard.

He explained that farmers are now getting money in their hands. Also, the upcoming wedding season in January has caused demand to improve as caterers (part of institutional sales) have also started to order. He expects the January-March quarter to witness better demand.

Parle Products which was not really impacted by weak rural demand has also seen higher growth in rural in the last one month.

“Rural demand was growing in the range of 3-4 per cent and is now in the range of 5-6 per cent in the last month,” Mayank Shah, senior category head at Parle Products said.

Even non-food demand has witnessed an uptick but it is still not to the extent expected despite winter setting in.

CavinKare , a south based FMCG major has also seen demand improve a tad bit in rural areas in the last week. “There has been a slight pick-up in rural but not to the extent we were expecting in personal care. While demand has seen a pick up due the onset of winter, it has not accelerated yet. However, demand should see momentum in the January-March quarter,” said Venkatesh Vijayaraghavan, chief executive officer at CavinKare.

Vijayaraghavan explained that once the cash cycle kicks in as farmers start to get money in their hands from their harvest then demand will also pick up especially in the March quarter.

However, according to retail intelligence platform, Bizom’s data for the first 20 days of the month, demand was still in the negative on a month-on-month basis and compared to last year as well. Demand was down 8.1 per cent in the first 20 days of December compared to November while on a year-on-year basis demand was down 9.4 per cent.

Even demand for namkeens (salty snacks) has witnessed a demand uptick in rural areas in the last 15 days, said Chandu Virani, founder of Balaji Wafers.