FMCG Players Express Concern On Fall In Urban Consumption After Margins Decline In Sep Quarter

Industry experts stated that companies such as HUL, Marico, ITC, Tata Consumer Products Ltd, and Godrej Consumer Products have shared concerns regarding the decline in urban consumption

The company witnessed a steady quarter despite the headwinds of oil costs and difficult consumer demand in India. Its standalone EBITDA margin stood lower owing to high inflation in palm oil.

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Major players in the FMCG sector clocked a fall in their margins in the July-September quarter owing to elevated input costs and food inflation. These factors resulted in a decline in the pace of urban consumption.

The leading FMCG firms have hinted at a price increase as commodity inputs such as palm oil, cocoa, and coffee become more expensive, reported PTI. Industry experts stated that companies such as HUL, Marico, ITC, Tata Consumer Products Ltd, and Godrej Consumer Products have shared concerns regarding the decline in urban consumption. These companies account for 65-68 per cent of the overall sales in the FMCG sector.

Godrej Consumer’s managing director and CEO, Sudhir Sitapati, noted, “We think this is a short-term hit and we will recover the margins through judicious price increase and stabilising of costs.”

The company witnessed a steady quarter despite the headwinds of oil costs and difficult consumer demand in India. Its standalone EBITDA margin stood lower owing to high inflation in palm oil.

The rural markets have continued to grow ahead of the urban regions. Further, FMCG players also saw growth in premium products and sales via quick-commerce channels.

Dabur India also talked about the challenges in the demand environment in the quarter under review as a result of the elevated food inflation. The company’s consolidated net profit slumped 17.65 per cent to Rs 417.52 crore, while the revenue from operations plunged over 5 per cent to Rs 3,028.59 crore.

Suresh Narayana, Chairman and MD, Nestle India, raised concerns about the consumption patterns and noted that the middle segment remains under pressure due to inflation. “It is extremely clear that the market is facing muted demand. The growth in F&B sector, which used to be in double digits a couple of quarters ago, is now down to 1.5-2 per cent,” the executive explained.