Lockdown: Disruption in production, supply lines to hit consumer business, says report

Though demand and consumption of FMCG and household products have "increased massively" after the lockdown came into force in India, there is a "considerable slowdown in growth" of the sector due to disruptions in the manufacturing and supply chain, said a report.

The impact of Covid-19 is also "expected to be felt acutely" in the consumer durables sector as it has a high dependency on China for imports and there could be price hikes, according to the report from consulting firm Deloitte.

The consumer durables segment, which was already having a difficult time, is now expected to take close to a year to show any signs of growth, it added.

According to the report, FMCG companies are facing disruptions across manufacturing and supply chain, and there is a considerable slowdown in growth of these segments.

Moreover, disruption in supply chain and logistics is leading to drying up of inventory levels at retailers, which may significantly impact the supply of products to consumers, it added.

"The high probability of the virus spreading in India could result in a massive impact on the consumer products and retail sectors. The consumers are likely to curtail their discretionary spending which would significantly impact the sector's growth further," it said.

However, it also said that "if the supply and logistics disruptions are minimized, a quick recovery in categories such as food and beverage and FMCG products can be expected post the situation concludes."
"Players may have already stocked inventory, so the impact is likely to be felt only towards the end of Q4 FY20," it said, adding, "Product prices could see an increase soon."