The coronavirus pandemic has completely changed life as we know it. The fear of catching the infection has also led us to adopt a more healthy and hygienic lifestyle.
The shift in trend clearly reflected in the first-quarter performance of FMCG companies such as ITC, Hindustan Unilever, Marico, Dabur, and Britannia.
With health & hygiene categories in focus, discretionary categories were on the slow lane.
The other theme that showed promise for Indian FMCG players was rural demand. The rabi harvest was good, Kharif sowing was off to a great start, rural cash flows were looking up and the pandemic did not wreak havoc in the rural areas. This optimism was reflected in the earnings of FMCG companies who also benefitted from benign raw material prices.
In terms of food items, there was a rising trend of ‘at-home’ as opposed to ‘out-of-home’ consumption. Apart from a thrift mindset, consumers were preferring larger pack formats as they seek to reduce the frequency of purchase.
Which products saw the highest demand?
India’s FMCG major, ITC witnessed the demand for staples, noodles, biscuits, dairy, sanitisers, hand wash, and floor cleaners. On the other hand, discretionary categories and those with relatively higher salience of ‘out-of-home’ consumption witnessed contraction.
The 'B Natural' range of juices particularly immunity range was met with encouraging response from discerning consumers.
Similarly, Hindustan Unilever saw the highest demand during the lockdown for coffee, sanitisers, deep cleaning, and Kissan products. HUL offers a prominent coffee brand, BRU, while sauces and jams fall under the brand Kissan.
Within deep cleaning, HUL offers products such as Domex under the home care category and Lifebuoy under skincare category. Skin Cleansing led by Lifebuoy delivered strong double-digit growth across formats.
Within the food and refreshment category, riding on the in-home and wellness and immunity trends, tea and coffee registered double-digit growth indicating robust demand.
On the other hand, demand for ice creams, skin, colour cosmetics, deodorant were impacted due to supply-led issues and closure of some of the channels that were extremely relevant for the categories
The company has divided its portfolio into three categories-Health, Nutrition, and Hygiene which constitutes 80 percent of the portfolio delivered healthy mid-single-digit domestic consumer growth.
For Marico, Saffola Edible Oils continued its growth journey, posted 16 percent volume growth, building on strong brand credentials, ramped-up presence, and increased in-home consumption. Parachute, their flagship product, remained on a firm footing as lockdown restrictions eased in May and June.
The volume market share of the Coconut Oil franchise which includes Nihar Naturals and Oil of Malabar strengthened by about 180bps to 62 percent.
Nihar Shanti Amla Badam led the recovery in May and June, while among the newer introductions, Parachute Advansed Aloe Vera Enriched Coconut Hair Oil witnessed encouraging trends in June.
Dabur witnessed the demand for Immunity boosting products such as Dabur Chyawanprash and Dabur Honey along with new launches in the hygiene space such as Dabur sanitiser, Dabur veggie wash, Dazzl surface cleaner, Dabur Sanitize disinfectant spray, Dabur Tulsi Drops.
COVID-19 environment helped the consumption of packaged food. Britannia saw demand for biscuits which is their mainstay business as 70-80 percent of revenue comes from biscuits.
Britannia sells biscuits such as Good Day in 9 variants, 50-50 in four variants, nutrichoice in nine variants.
Earnings performance
Unprecedented disruptions in economic activity caused by nationwide lockdowns in the wake of COVID-19 pandemic weighed on the performance of most companies in the first quarter of FY21.
ITC reported 26 percent year-on-year (YoY) fall in standalone net profit for the quarter ended June 30, 2020, at Rs 2,342.76 crore. The company had reported a net profit of Rs 3,173.94 in the same quarter a year ago.
HUL reported a standalone profit of Rs 1,881 crore for the quarter ended June, a growth of 7.2 percent compared to the previous quarter, supported by sharp fall (down 31.4 percent) in advertising and promotion expenses, and strong double-digit growth in foods and refreshment segment.
Marico reported a robust 23.2 percent rise in consolidated net profit for the quarter ended June 2020 at Rs 388 crore as against Rs 315 crore in the year-ago period
Dabur India reported a net profit of Rs 341.8 crore for the quarter ended June 2020, registering a 5.9 percent YoY dented due to the lockdown disruptions.
India's largest biscuit maker Britannia Industries on July 17 reported a massive 117 percent year-on-year (YoY) increase in consolidated profit for the quarter ended June 2020, driven by strong revenue and operational growth. Profit increased to Rs 545.7 crore during the June quarter 2020, compared to Rs 251.03 crore in the corresponding period last fiscal.
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