Author: Priya Sheth

Nielsen slashes FMCG growth forecast for 2020 to -1 to 1%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Market research firm Nielsen has revised the FMCG forecast for the current calendar year from 5-6 percent to -1 to 1 percent. This change in the forecast comes on the back of changing consumption patterns owing to the COVID-19 outbreak and the lockdown imposed over the last three months.

On an all India basis, value growth has declined by about 18 percent in the second quarter of 2020 versus a 5.3 percent value growth in the first quarter of 2020. “This is perhaps the worst ever FMCG growth India has ever seen. However, there was a revival in value growth of about 4 percent in June 2020,” said Prasun Basu, President – South Asia, Nielsen.

If you break up the growth, metros saw a 20 percent drop in growth in the second quarter of 2020 versus a 7 percent growth in the first quarter of the year. Interestingly, rural saw a 12 percent growth in June 2020, this was 3x of all India growth. Strong rural growth was led by reverse migration hotspots and government schemes.

In terms of categories, the non-food space saw a strong recovery with unlocking. Personal care and home care were two categories that saw a revival in 2020. Traditional trade and e-commerce channels have bounced back to original levels, said Nielsen in its outlook.

The research firm expects the second half of the year to be better as there is an expectation that that spends will revive further owing to festivities.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Your morning cup of chai gets costlier as tea makers hike prices

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Your favourite morning brew may have got a tad more expensive as tea makers such as Hindustan Unilever, Tata Consumer Products and Wagh Bakri have hiked prices in the range of 10-15 percent.

The price hikes have been implemented in a staggered two-phase manner, said sources.

The first set of price hikes hit the market in the months of April and May and the second set of price hikes were implemented in the months of June end- July start.

The price hikes come at a time when the industry is facing several production and operational challenges. “Tea gardens open in mid-March and that was when the lockdown was announced. Further, we saw incessant rain in June, which has affected the quality of the crop,” said a tea trader.

Labour shortage at tea gardens and factories and intermittent lockdowns have also affected production for companies. Because of some of these factors, weekly auction prices have jumped to a record of Rs 232.60 per kg, up 57 percent from a year ago.

FMCG companies have had no choice but to pass on price hikes to consumers owing to procurement and supply constraints. HUL and Wagh Bakri tea have hiked prices in the range of 10-15 percent across brands and stock-keeping units (SKUs).

HUL said that it does “selective and judicious price changes across its portfolio in the normal course of its business.”

Wagh Bakri Tea confirmed that it has taken a 5 percent price hike across brands and SKUs for the months of May, June and July.

Trade sources say that Tata Consumer Products, which manufactures Tata Tea Gold, has hiked prices by Rs 20- 40 per kg across its brand and SKUs. The company, however, did not respond to the CNBC-TV18 query.

With uncertainty about production and the lockdown, tea makers are expecting to take another round of price hikes soon.

“If things don’t stabilise, it is likely that we may have to take another 10% price hike over the next month,” said a tea manufacturer who did not wish to be named.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

New Consumer Protection Act 2019 takes effect; e-commerce rules on unfair trade practices soon

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government has notified the new Consumer Protection Act 2019,  replacing a three-decade old version of it. The Consumer Protection Act 1986 provided for a three-tier consumer dispute redressal structure.

Under the new Act, the government has introduced consumer protection councils, a central consumer protection authority, and a simplified dispute resolution process.

The CPA 2019 will also cover rules on e-commerce and direct selling. The Central Consumer Protection Authority will serve as an apex body to look into consumer grievances. It will be empowered to investigate violations of consumer rights, recall unsafe goods, and penalise manufacturers/endorsers/publishers of misleading advertisements.

“The rules for prevention of unfair trade practice by e-commerce platforms will also be covered under this Act. The gazette notification for establishment of the Central Consumer Protection Authority and rules for prevention of unfair trade practice in e-commerce are under publication,” said the Ministry of Consumer Affairs in a release.

The CPA 2019 has introduced mediation as an alternate dispute resolution mechanism. Mediation cells will be attached to consumer commissions. “Panel of mediators to be selected by selection committee consisting of the President and a member of Consumer Commission,” said the release.

CPA 2019 also includes a provision of product liability. This will deter manufacturers and service providers from delivering defective products or deficient services.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

FMCG industry shows signs of rebound in June: Nielsen

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After three months of the lockdown, the FMCG industry has exhibited signs of a rebound in June to pre-COVID levels. This recovery in growth levels has been seen in both urban and rural areas, said market research firm Nielsen.

During these periods, traditional trade contributed to 88 percent of the sales and about 10 percent sales took place through e-commerce. Beauty as a category has seen a sharp recovery in June and daily use categories have returned to normalcy, according to Nielsen.

Within the beauty category, deodorants, hair colours and skincare saw good recovery. Staples and categories like packaged atta, refined oils and cheese continue to trend in terms of consumption.

“Consumers are willing to spend more on immunity boosters and hygiene categories. This is not a short term ask or a single quarter ask but a longer duration trend,” said Sameer Shukla, West Market Leader, South Asia, Nielsen Global Connect.

“Brands are also innovating and including ingredients like ginger, turmeric in regular product categories as consumers have become health conscious,” he added.

The coronavirus outbreak in the country has negatively impacted household income for Indians.

About 60 percent claimed that COVID-19 has negatively impacted their household income and monthly household expenses have gone up by 3 percent, Nielsen said in an earlier report. It added that those surveyed expect business activity to rebound in the third quarter of FY21.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

COVID-19 effect: Electronics retailers foresee muted Independence Day sales amid uncertainty

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Consumer durables and electronics retailers have been undergoing a tough time for the last few months. Sudden lockdowns in different parts of India have made it very difficult for retailers to plan inventory and to stock up ahead of the sale season.

“We haven’t been able to make any preparations for the sale season this year,” said an electronics retailer. “We usually have one week of offers around the Independence Day period and sales grow anywhere between 25-40 percent in the period.”

Owing to the COVID-19 crisis this year retailers are plagued with issues like stock unavailability, shutting down of warehouses owing to the frequent lockdowns and a cap on the number of customers who can enter store at a time.

“In such a situation, it may not be the wisest thing for a brand or a retailer to come out with any discount schemes,” said a consumer durables retailer who added that there was a high pent up demand for home appliances like washing machines, dishwashers and vacuum cleaners when stores initially opened after the initial strict lockdown.

Work from home and learn from home have regimes have also resulted in high demand for laptops. And the growing tensions between India and China have made it difficult for Chinese imports to land smoothly.

“China issues have resulted in lack of spare part availability for laptops and mobile phones. Brands are not able to give us a clear timeline on when a steady flow of products will be available,” said a manager of an electronics retail store in Mumbai.

Stores like Croma and Vijay sales have been offering regular cashback offers and EMIs on products available. However, they are clear that this year there will be no aggressive sale during the Independence Day period. “We have been in conversation with brands for deals on select SKUs [stock keeping units],” said Nilesh Gupta, MD, Vijay Sales.

Croma may decide to offer deals on categories like home appliances and televisions. However, the retailer is yet to take a decision on the nature and quantum of deals. Retailers are hopeful for things to stabilise by the festive period.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

GCPL aims to make Godrej Protekt a Rs 500 crore brand by 2023

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With the increasing demand for hygiene products amid the coronavirus outbreak in India, Godrej Consumer Products has extended its hygiene portfolio to cover personal, home, and kitchen categories. The company has launched 12 products including soaps, face masks, fruit & veggie wash and dish wash under the three broad hygiene categories.

“The aspiration is to grow Godrej Protekt 7-8x and make it a Rs 500 crore brand in the next three years,” said Sunil Kataria, CEO – India and SAARC, GCPL.

Godrej Protekt, the range of hygiene products from GCPL, has also partnered with the Indian Railways’ Central Railway to improve the hygiene levels of passengers and staff. A total of 2 lakh products will be used for the program and will reach 400 local and long-distance trains.

Under this partnership, soaps will be given to all railway employees and hand sanitizer sachets will be distributed among passengers on long-distance trains. GCPL will be providing air and surface sprays for 87 ticket booking counters on Central Railway stations.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Amul makes history with 33 product launches, highest ever in a single quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Dairy major Amul has its plan for 2020-2021 well carved out. Gujarat Co-operative Milk Marketing Federation, which markets its products under the brand Amul, clocked revenues of Rs 38,550 crore in FY20. The first four months of FY21 have been pretty much of a dream run for the company, said a person aware of developments at the dairy major. During this period, Amul launched 33 new products – its highest ever number of product launches in a single quarter.

Estimates indicate that Amul products are consumed by a billion consumers daily. Its wide distributor network comprising 10,000 distributors and a million retailers ensured that Amul products reached a large part of the country despite the lockdown.

Also read: HUL pips ITC to become biggest FMCG stock in Nifty

Taking advantage of its robust supply chain and distribution channel, Amul pushed not only its core dairy products but also its FMCG products into the market. “In our locality, there was a severe shortage of biscuits in the lockdown. The only biscuits available were Amul butter cookies and chocolate chip cookies,” said a Vidhi Shah, a consumer from South Mumbai.

During the March to June period, Amul saw a 30 percent growth in its cheese category. “This growth was despite orders from the HORECA segment falling to almost zero,” said RS Sodhi, managing director, Amul, who said that the HORECA (Hotel Restaurants and Catering) segment accounts for 35 percent revenues for the cheese category. The chocolates category too saw exponential growth. Amul, which usually sees the highest sales for the segment in December-January, saw high sales for the chocolates category in the May-June period.

The last four months haven’t been easy for FMCG companies. Demand outpaced supply in the initial weeks of the lockdown and logistical challenges added to the troubles. But even as FMCG companies continued to scale up production of every-day use products that were high in demand during the lockdown, they also realised that the trend of in-home consumption was here to stay.

Also read: Tata Consumer Products to emerge as full-fledged FMCG company: N Chandrasekaran

Quick fix meals, packaged foods and ready to eat products saw a huge spurt in demand during the lockdown. Taking into account these growth trends and consumption patterns, Amul decided to re-assess its product launch pipeline. Amul, which usually launches 10-12 products every quarter, decided to triple the number the products reaching the market. Launches in the last few months included immunity beverages like ‘Haldi Doodh’ and even ‘Panchamrit’ along with a series of launches under the bakery, ice-cream and cheese category.

The company is now looking beyond the dairy segment and plans to launch frozen foods and ready-to-eats. Amul is also looking at ramping up its presence in the packaged sweets segment. Amul already sells packaged sweets like Gulab Jamun and Rasmalai. The idea is to ramp up capacity and also increase variants in the packaged sweets space. Production for these will be starting shortly in Amul’s Gujarat and Mumbai plants.

Also read: Amul says Indians are consuming a lot of cheese during the lockdown

For the frozen foods space, Amul is in the process of setting up a large potato processing plant in Banaskantha (North Gujarat). The dairy major plans to roll out products like French Fries, Aloo tikki and even cheese and Paneer Parathas. At present, ITC and McCain have an established presence in the frozen foods space. “We remain optimistic about growing at 15-17 percent this year,” signs off Sodhi.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Consumer Products agreement end: Over 1,000 jobs may be lost, say distributors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Consumer Products’ move to terminate distributor agreements for Tata Tea and Tata Salt has not gone down well with the distributors. Sources close to the development told CNBC-TV18 that distributors have now gone ahead and made a joint representation to the company.

Distributors claim that the termination of agreements will result in direct and indirect job losses of over 1,000 employees working in the entire trade channel. To avoid this business loss, distributors have sought ways to collaborate with Tata Consumer Products under the new structure it plans to put in place, said the sources, who did not want to be named.

In the representation made by Tata Tea and Tata Salt distributors, they claim that 80 percent of channel partners have been associated with the Tatas for over 15 years. Distributors have also said that they are willing to work together to help TCPL achieve cost synergies and discuss a ‘win-win’ situation with the management.

Last week, Tata Consumer Products sent agreement termination notices to Tata Tea and Tata Salt distributors and gave them one month to wind up the business.

Estimates indicate that Tata Consumer Products has about 40-50 distributors that help supply goods to multiple stockists and dealers. These distributors get a margin of about 1-1.25 percent. In the present scenario, distributors procure orders from stockists and place these orders with the packaging centre. Payments, invoice generation, etc. are taken care of by the distributors.

“We are in conversation with the impacted distributors and remain committed to working with all our stakeholders to support and help them through the transition phase,” said Tata Consumer Products in a statement to CNBC-TV18.

The reason Tata Consumer Products has taken this decision to terminate distributor agreements is that it wants to build in efficiencies and scale up business processes through digitisation. This move will enable TCPL to deal directly with stockists and dealers.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Hygiene products, biscuits and Fair & Lovely topped rural India’s shopping list during lockdown

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While the country was under lockdown, consumers in rural India purchased large quantities of milk-based biscuits, Fair & Lovely, Ayurveda balms, and milk food drinks. Interestingly, these categories clocked double-digit volume growth for the period of March to May against the same period last year, according to data from Kantar Worldpanel which tracks purchases of over 80,000 Indian households every month.

However, the real volume drivers in rural India were the household hygiene segment and the personal hygiene segment. Mirroring the same trend as in urban markets, volume growth for washing powder, toilet cleaners, hair wash, hand wash and toilet soaps in rural India zoomed during the March to May period, YoY, according to the report.

Consumption trends indicate that rural households continued to add branded products to their baskets during this period. Category growth continued to be driven by mass brands especially in the detergent bars, toilet cleaners, and atta segments.

Data from Kantar Worldpanel indicates that FMCG volumes in rural India bounced back to 5 percent in May against the 1 percent in April and 3.2 percent in March.

The FMCG category saw a 3 percent volume growth in rural India versus a 4 percent volume growth in urban India. In the personal care segment, rural volumes grew 9 percent versus a 13 percent growth in urban India. Household care saw a 3 percent growth in rural India versus a 6 percent growth in urban India.

Volumes in the food segment too were higher in urban India at 6 percent versus 4 percent in rural India. These figures indicate that rural markets only marginally lagged behind urban markets during the period.

The biggest decline in volumes was seen in the beverages segment. A steeper decline of 25 percent was seen in urban markets compared to a 12 percent decline in rural markets.

A break-up of growth on a state-wise basis indicates that the top five states in terms of volume growth were Gujarat, Tamil Nadu, Chhattisgarh, West Bengal, and AP. Maharashtra and Delhi were two markets that secured volumes lower than last year.

Kantar Worldpanel believes that rural markets could see good growth in the coming months with factors like a decent monsoon, policies around ‘Atmanirbhar Bharat’ which support rural India, and better distribution plans by FMCG companies. There is an expectation that rural could outgrow urban markets in the next quarter itself.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

3,300 restaurant staff across India gets Rs 5,000 each to help cope with COVID-19 distress

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As many as 3,300 employees working in various restaurants in India got a sum transfer of Rs 5,000 each to help them cope with the COVID-19 pandemic, which has led to scores of restaurants across India still remaining shut.

The Rs 1.65 crore transfer was aided by Pernod Ricard India, which pledged Rs 1.4 crore as part of its CSR initiative, to help the National Restaurant Association of India’s ‘Rise For Bars’ initiative.

“A small sum but I am sure it will help these 3300 families during this crisis,” tweeted Anurag Katriar, President, NRAI.

3300 employees across our member restaurants got this msg yday! A small sum, but I am sure it will help these 3300 families during this crisis.

Thank u #BeamSuntory & #PernodRicard for being generous partners to the #RiseForBar initiative of @NRAI_India#ThodaSaAatmnirbhar pic.twitter.com/tWAIlie4ac

— Anurag Katriar (@KingKatriar) July 9, 2020

The NRAI, which counts over 5 lakh restaurants across India as its members, has warned that 30-40 percent of restaurants, including large chains, may be permanently closed across the country, afflicted by the financial losses from the COVID-19 shutdown.

The Ministry of Health and Family Welfare recently issued standard operating procedures for restaurants to begin operations again, stressing on the need to maintain social distancing as well as operate at 50 percent capacity.

But affected states such as Maharashtra continue to keep restaurants shut as part of the battle to contain the COVID-19 outbreak.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow