FMCG, electronic goods see lower sales in June vs May
India’s fast-moving consumer goods (FMCG) market fell 1% in value while sales of electronic goods such as air-conditioners and refrigerators dipped 25% in June from May, indicating higher prices continue to hurt demand. This is the second consecutive decline for FMCG and consumer electronics sequentially, according to the latest report by Bizom and industry estimates.
“We see a slowdown in demand but the market is still growing at an overall level, especially biscuits, where price hikes have been lower compared to other segments,” said Parle Products senior category head Mayank Shah. “There is also an impact of seasonality when compared with sequential months, which could have reflected in the declining numbers.”Read More : Mouser Electronics Honored with Top Performance Awards from Manufacturer Partners The June quarter, however, saw growth of 14% due to a low base last year, stemming from the Covid second wave-led demand impact. Over the past year, shrinkflation, or reduction in pack sizes without lowering prices, has helped companies post value growth as volume declined. However, experts feel higher prices have started to impact consumption to a level where both value and volume have been hit.
This could reverse as commodity prices have started to ebb globally. "We are seeing the prices of edible oils cooling off with supply starting to normalise," said Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom. "Also, the government is trying to rein in the prices of wheat, rice, fuel, etc. This could help reduce pressure on FMCG companies to refocus on consumption growth and move away from the existing lever of priceled growth."
"We are probably getting to a situation where we have now seen 14 consecutive months of double-digit wholesale price inflation," Paranjpe told shareholders. "I don’t know when we have last seen something like that. FMCG markets, which have generally been strong for a long period of time, have started seeing the effects of this."
DISCRETIONARY SPENDS
The consumer electronics market is facing pressure in the entry-level segment, which has shrunk by 40%, according to industry estimates.
Analysts said even smartphone sales continued to be under stress in June. "We have witnessed demand pressures in terms of volume growth, especially in the entry-level segment, which is expected to recover around the festive season," said Deepak Bansal, vice president at LG Electronics, the country’s largest appliance manufacturer. He, however, said the premium segment is growing as such consumers are more insulated from inflationary pressures.
Consumer electronics companies have decided to postpone the price hike that had been expected in July, despite the weakening rupee, to cushion consumer sentiment.
“We see a slowdown in demand but the market is still growing at an overall level, especially biscuits, where price hikes have been lower compared to other segments,” said Parle Products senior category head Mayank Shah. “There is also an impact of seasonality when compared with sequential months, which could have reflected in the declining numbers.”
This could reverse as commodity prices have started to ebb globally. "We are seeing the prices of edible oils cooling off with supply starting to normalise," said Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom. "Also, the government is trying to rein in the prices of wheat, rice, fuel, etc. This could help reduce pressure on FMCG companies to refocus on consumption growth and move away from the existing lever of priceled growth."
"We are probably getting to a situation where we have now seen 14 consecutive months of double-digit wholesale price inflation," Paranjpe told shareholders. "I don’t know when we have last seen something like that. FMCG markets, which have generally been strong for a long period of time, have started seeing the effects of this."
DISCRETIONARY SPENDS
The consumer electronics market is facing pressure in the entry-level segment, which has shrunk by 40%, according to industry estimates.
Analysts said even smartphone sales continued to be under stress in June. "We have witnessed demand pressures in terms of volume growth, especially in the entry-level segment, which is expected to recover around the festive season," said Deepak Bansal, vice president at LG Electronics, the country’s largest appliance manufacturer. He, however, said the premium segment is growing as such consumers are more insulated from inflationary pressures.
Consumer electronics companies have decided to postpone the price hike that had been expected in July, despite the weakening rupee, to cushion consumer sentiment.
Source: economictimes.indiatimes.com
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