FMCG sector cheers early monsoon, hopes for buoyant growth
Nearly 50 percent of Dabur's domestic sales are from rural India.
New Delhi: The early arrival and prospects of a good monsoon are making FMCG firms such as Emami, Dabur, Marico and GSK Consumer Healthcare upbeat with expectations of growth in uptake in rural areas that account for up to 50 percent of their sales.
According to the FMCG companies, good monsoon adds to the 'feel good factor' in an economy and creates favourable emotional base for consumption.
"Early and good monsoon specially means good news for the rural economy where dependence on agriculture is high and thus a good monsoon benefits rural consumers very much," said Emami Ltd, CEO (Sales, Supply Chain and Human Capital) N Krishna Mohan.
According to Mohan, Emami which gets about 40-45 percent of total sales comes from rural India, expects increased consumption of FMCG products due to a good monsoon. Emami had posted a total turnover of Rs 1,627 crore in 2012-13.
"A buoyant economy especially in rural India would mean more disposable income and would be favourable to FMCG industry as well and there would be increased consumption of FMCG products," The Emami CEO said.
Expressing similar views, Dabur India CFO Lalit Malik said, "Good monsoons are generally favourable for FMCG consumption, particularly rural markets. With a good monsoon, we expect improvement in rural consumption sentiment."
Nearly 50 percent of Dabur's domestic sales are from rural India. Last fiscal the firm had a total sales of Rs 6,146 crore.
Terming the early arrival of monsoon as a good development, Marico Group CFO Milind Sarwate said, "It createsa favourable emotional base for increased consumption. The feel good factor generated by a good monsoon does help in improving buyer behaviour."
When asked how much of Marico's sales comes from rural market, he said, "The proportion has increased over time and is currently around 30 percent."
Another FMCG player GlaxoSmithKline Consumer Healthcare, is also expecting this year's monsoon to boost consumer spending in rural market.
"Early monsoon lifts consumer sentiments and gives boost to agriculture and economy and therefore lifts consumer spending, especially in rural markets," said GlaxoSmithKline Consumer Healthcare, Executive Vice President, Jayant Singh.
The FMCG companies are, however, of the view that over the last few years monsoon is not playing as much role in pushing consumer demand as was the case a decade ago.
"This is because of various other reasons which impact the consumer sentiment. Also the non-farm incomes in rural India are increasing. Therefore, the reliance on monsoon is not what it used to be a decade ago, though the same is still significant," said Mohan of Emami.
The Weather Report: No respite for North India from extreme heatwave yet; heavy rains pulverise North East
The Weather Report: On Friday, Sirsa recorded 48.8°C maximum temperature breaking its previous all-time record of highest maximum temperature in any month
Southern India braces for more rains this week, yellow alert sounded in Karnataka, Kerala; Bengaluru to get cooler
The IMD has sounded an orange alert for Karnataka for Wednesday and a red alert for Thursday, indicating heavy rainfall at isolated places of the state
The Union Home Minister has also emphasized that it should be ensured that lives as far as possible should not be lost in incidents such as heatwaves and lightning