Economic Times |
FMCG to grow 12-13% in 2018: Study
MUMBAI: Nearly 70 per cent of growth in the FMCG industry in June this year was driven by consumption volumes, signalling a complete revival from uncertainties following demonetisation and implementation of GST. According to Nielsen India’s report on the sector, the FMCG industry growth rate was 11.6 per cent in terms of moving annual total (MAT) in June 2018. The research firm said that in the June quarter in the previous year, the industry expanded by nearly 11 per cent on the back of a low base, consumption tailwinds from GST rate cuts, strengthening macro-economics and robust monsoon projections. ALSO LIKE OUR FACEBOOK PAGE: https://www.facebook.com/latestgstnews/ The economic momentum is expected to gather pace through the second half of 2018 as well, Nielsen said. Industry experts pointed out that input costs are on an upswing, which could result in price increases. Looking at the overall macro-economic scenario and FMCG market dynamics, however, Nielsen has forecast a growth rate of 12-13 per cent in calendar 2018, which is closer to the growth range witnessed by the industry in 2017. Consumer inflation increased by 4.17 per cent in July 2018 — lower than the previous month. The inflation outlook remains uncertain with upside risks arising from rising crude prices, additional fiscal borrowings and imported inflation from a significantly weakened rupee. Godrej Consumer Products MD Vivek Gambhir said, “If input costs increase significantly beyond current levels, we could see limited price increases in the latter half of the year. The onus for companies, however, will be to focus on volume growth.” Leading FMCG companies, in their Q2 results, have maintained that they see a gradual improvement in consumer demand. “A gradual recovery in FMCG growth has been under way for the past six months. We expect growth to sustain and improve in the quarters ahead. While both urban and rural are recovering, we anticipate that rural growth will outpace urban growth. The focus for companies will be to continue stimulating consumer demand and driving volume growth,” said Gambhir.With wholesale channels bouncing back, FMCG growth in rural markets has picked up, reducing the growth differential between rural and urban areas. Nielsen India executive director Sameer Shukla said this is because cash is back in the market. Shukla said trade dynamism triggered by demonetisation and GST rollout has almost settled down. As a result, the June quarter witnessed strong shipment growth on the back of the low base of the previous year. With the passage of time, retail stock levels, too, have bounced back and stand at a higher level from the pre-demonetisation period. Interestingly, the number of FMCG manufacturers of Indian origin (over Rs 1,000-crore turnover) in the top 10 fastest growing companies has increased from seven in 2016 to nine on the basis of MAT June 2018. |
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