Subdued demand narrative; Most consumer companies are guiding for soft demand trends (Q2 growth slower to stable vs Q1 for most) with low visibility on near term growth outlook. Though improved monsoon and upcoming festive season were cited as rays of hope, there is little evidence of conviction regarding growth revival. Gradual demand improvement is expected by most companies. Rural FMCG growth (witnessed sharper downtick) is now trending in-line with urban. Low Unit Packs are registering faster growth.
There is clear divergence in growth across distribution channels with rising consumer shift towards Modern Trade, Cash-n-Carry and E-Commerce in the urban centers. Direct reach enhancement is a key driver of revenue growth ensuring better coverage and wider assortment across more outlets, thereby mitigating the hit from moderating salience of the wholesale channel.
Overseas operations have a mixed outlook with Middle East region witnessing improving demand trends, Indonesia stabilizing and some African nations continuing to face challenges.
Innovation/Premiumization – Uptrading is a key part of corporate growth strategies across companies. Moving consumers to higher ticket packs (Rs5 to Rs10, Rs10 to Rs20) is another key agenda for corporates to improve mix/margins.
Innovation intensity (with focus on differentiated offerings) is set to rise across most companies. Companies like Marico, Britannia, and GCPL are moving towards portfolio diversification beyond the existing core categories as they intend to create long term growth drivers.
Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.
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