Economic slowdown: It is not a doomsday scenario for FMCG sector, says Marico MD and CEO Saugata Gupta
Gupta said that while the category growth has gone down in rural areas due to consumption stress, large brands with direct rural distribution may be consolidating market shares
Gupta said that in other sectors like auto, pharma, etc, the impact is far more compared to FMCG
He added that there has to be more investment by both the government and the private sector
Last week Britannia MD expressed concern over slowdown in economy saying it won't go away until the feel-good factor comes back
Days after managing director of Britannia Ltd Varun Berry said that the FMCG players are seeing turmoil in the market, managing director and chief executive officer of Marico Ltd Saugata Gupta has said, "it is not a doomsday scenario or something like that in FMCG sector."
Gupta, in an interview with DNA, said that while the category growth has gone down in rural areas due to consumption stress, large brands with direct rural distribution may be consolidating market shares.
Explaining why he thinks the slowdown is not that stressful, Gupta said, "Unlike durables or auto, which is more discretionary, all said and done, because of the direct benefit transfer and other things, at the very bottom end the impact on the consumption is not that high."
He also said that in other sectors like auto, pharma, etc, the impact is far more compared with fast-moving consumer goods (FMCG). Gupta added that there has to be more investment by both the government and the private sector.
Last week Britannia MD Berry had expressed concern over the slowdown in the economy saying it won't go away until the feel-good factor comes back and the investment vehicles start to power back.
"We've grown only 6 percent and the market is growing slower than that. And that's a little bit of a worry, because even for a Rs 5 product if the consumer is thinking twice before buying it, then there is some serious issue in the economy," Berry was quoted as saying by DNA.
Taking a serious note of the ongoing slowdown that has gripped several industrial sectors in the country and has resulted in job losses, Prime Minister Narendra Modi last week reviewed the state of the economy with Finance Minister Nirmala Sitharaman.
Modi reportedly asked Sitharaman to come up with detailed plans to spur jobs and put the economy on the growth track.
An SBI study said last week said the current economic slowdown could be attributed to a combination of structural and cyclical factors, in addition to global uncertainties.
The country's economy is showing signs of a slowdown, with hi-frequency indicators like industrial output posting subdued growth and automobile sales touching historical lows.
"The reasons for the current domestic slowdown, apart from the global uncertainties look like a combination of both structural and cyclical factors," SBI said in its research report 'Ecowrap'.
It said there are clearly a host of structural factors that are holding back current consumption.
Former Reserve Bank of India (RBI) Governor Bimal Jalan recently said the current slowdown in the Indian economy is cyclical and growth will pick up in one or two years. Jalan also pointed out that the situation today is very different from 1991 when the country faced a severe economic crisis on the external front.
"India is in a very strong position today, unlike in 1991. If you look at our inflation rate, it's quite low. If you at look at our reserves, it's quite high," he asserted.
With agency inputs
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