Products such as skin creams, floor cleaners and washing powders are finding a little more space in the shopping baskets these days as a combination of aggressive offers, innovative formats and new launches are pushing consumers to stock up these items. The food basket, in contrast, is seeing lower volume growth as inflation concerns prompt consumers to consider cheaper options.
Data from Kantar Worldpanel, which tracks household consumption, shows that personal care volume growth stood at 5.7% in the December quarter versus 4.1% in the September quarter and 4.3% a year ago. Household or home care reported a volume growth of 3.8% in the December quarter versus 2.9% seen sequentially and 3.4% registered a year ago.
Food and beverages (F&B), meanwhile, reported a volume growth of 4.7% in the December quarter versus 6.3% reported a year ago, data from the research agency show. When compared sequentially, however, there is a slight improvement in sentiment in the December quarter, it said, with September quarter volume growth at 4.4%.
“Overall, FMCG growth has increased from 4.1% in the September quarter to 4.6% in the December quarter. But this is moderate and trails the growth rate seen last year same period (6.3%),” the research agency said. “Food and beverage performance has been weaker in the December quarter versus last year, but personal care and home care have both done well,” it added.
The quarterly trends also impacted full-year performance. FMCG volume growth of home and personal care improved in calendar year 2024 versus 2023. Food and beverages showed a decline.
Executives at top home and personal care companies such as Hindustan Unilever (HUL) and Godrej Consumer (GCPL) have warned of currency and commodity volatility, which could hurt growth in the future. HUL, for instance, saw December quarter revenue supported largely by a 6% underlying sales growth (USG) versus last year in the home care segment, its largest division. GCPL’s home care portfolio grew 4% year-on-year, led by air freshners and fabric care, which reported double-digit growth each in the October-December period.
“Currency volatility is a cause for concern. Crude and palm oil are big inputs for us in home care. And palm oil prices have been shooting up, which increases the prospect of price hikes. The tightrope we are walking is how to manage the price-value equation,” Srinandan Sundaram, executive director, home care at HUL told FE in an interview last week.
Sudhir Sitapati, MD & CEO, GCPL has said that there could be significant price hikes in soaps. “Weak seasonality and urban slowdown have impacted premium formats in household insecticides. In personal wash (soaps), volumes declined due to palm oil derivative inflation, offset by pricing growth. Significant price hikes are expected to continue impacting margins as inflation concerns remain,” he said.
In F&B, meanwhile, companies such as Nestle India and Britannia Industries have indicated that they will continue to take price hikes in line with inflation despite a challenging demand environment.
“Where ever price hikes are essential, we will take it. But we will keep it as low as possible, so that it does not impact volume growth,” Suresh Narayanan, chairman and MD, Nestle India, said.
Britannia’s executive vice-chairman & MD, Varun Berry said that the company would consider at least a 2.5% price hike in the March quarter to tackle inflationary concerns after a 2% price increase in the December quarter to offset commodity inflation.