Chief executives of some of the world’s top consumer goods companies, including Unilever, Coca-Cola, PepsiCo, Nestle and Mondelez, have remained largely positive about the India market in their recent earnings calls for the March 2023 quarter.
But some of them have voiced their concerns over rural sales and the impact of inflation and weather on business in India, which is ranked amongst their priority markets in the world. In particular, revival of the rural economy was a critical part of the commentary of Unilever, which counts India along with the US and China among its key markets. While the US contributed nearly 22% of the multinational’s global sales of 60 billion euros (or $63.3 billion) in 2022, India contributed around 12% to global topline, data from its results showed.
Unilever’s CEO Alan Jope said that low-income consumers were feeling the pinch of inflation, especially in rural areas, even as urban peers were stronger with their purchase decisions during the March quarter.
“One overarching phenomenon we are seeing is that while urban India remains buoyant, the rural peer is feeling the pressure of inflation. So, it is quite a big difference emerging in the performance of urban and rural India,” Jope said.
Coca-Cola’s chairman and CEO James Quincey, while lauding the performance of India, which he described as a “resilient economy”, warned that there was “worse weather” in April, which had impacted business.
To put things in perspective, India had seen unseasonal rains in March and early April. While temperatures have soared in the last few weeks, there have been brief spells of rainfall in cities such as Mumbai, Pune and Delhi in the last few days.
“I don’t think there’s anything particularly productive about the results in the first couple of weeks of April. There was some worse weather in India and the US, and the shift of Easter. But I don’t think one can draw a lot from a couple of weeks in April,” Quincey said.
Coca-Cola, which is the world’s largest beverage company, drove nearly three billion transactions at affordable price points in India during the March quarter of 2023, as it sought to consolidate its position in one of its key markets.
The company said it grew its business in India by adding retailers, investing in cold drink equipment, and offering products at the right price points to recruit consumers.
Rival PepsiCo also said that its Indian unit delivered a double-digit organic revenue growth in the March quarter, with the market having a long runway for growth. Nestle’s CEO Mark Schneider said that growth in the India business was supported by distribution expansion in rural areas, e-commerce momentum and increased focus on premiumisation.
Mondelez International’s CEO Dirk Van de Put said that the company’s outlook for 2023 remained optimistic in India and that it would invest in capacity increases in the domestic market. While Cadbury and Oreo are big Mondelez brands in India, the company made no mention of the controversy surrounding its Bournvita health drink in the country.
Last week, the National Commission for the Protection of Child Rights (NCPCR) asked Mondelez India to withdraw all misleading advertisements, packaging and labels on its product. This came within weeks of a food blogger flagging high sugar content in the health drink. The child rights body also asked the company to send a detailed explanation to the Commission within seven days on the matter.