Views on the FMCG Industry #NIFTYFMCG πŸžβ€‹πŸ₯™β€‹πŸ‘˜β€‹πŸ–ŠοΈβ€‹

β€’ Recently, the data analytics firm Nielsen released its FMCG Snapshot for the months of Jan-March.πŸ“„β€‹

β€’ If the overall FMCG market grew by 6%, it was only due to double-digit price increases.♐​

β€’ FMCG Volumes in rural India fell by 5.3% throughout the time.〽️​

β€’ The overall volume loss is split across categories, but the non-food component is substantially worse. β€‹βŒβ€‹

β€’ The non-food segment of FMCG saw a 9.6% drop in volume during the quarter under review, while the food segment decreased 1.8%. πŸ’²β€‹

β€’ Furthermore, the business is experiencing downtrading as consumers transition to smaller pack sizes. ❗​

β€’ In continuation of last year, macroeconomic indices continue to guide Indian consumer purchasing habits, and they are experiencing the brunt of price increases, particularly in the food and basics categories. πŸ‡β€‹πŸˆβ€‹πŸ‰β€‹

β€’ 5.3 percent increase in exits by small manufacturers during the quarter, who struggled to pass on much increased input costs to consumers and got looted as a result. β†˜οΈβ€‹

β€’ Since FMCG companies operate closely to the consumer, many companies including #HINDUNILVR , #NESTLEIND e , #DABUR and #MARICO cited in the their annual reports of 20-21 that high inflation was leading to a marked slowdown in growth rates. πŸš«β€‹

β€’ Companies have in their quarterly earnings have also stated that rising raw material costs harmed company profits and liquidity during the January-March quarter. Also, costs of key raw and packaging materials skyrocketing to 10-year highs, and cautioned that high inflation was likely to be a key factor in the short to medium term. β€‹βš οΈβ€‹

β€’ Many companies have also opted for what is called β€œShrinkflation” - downsizing the size, quantity, or quality of the product without increasing the costs. This is done in inflationary environments when input costs go high and in order to prevent erosion of customer base, companies reduce the quality, quantity, and size of the products hoping that the customers would not notice it, without changing the price. β€‹πŸ’°β€‹

What are your views on the industry? Please do comment!