Covid impact on discretionary spends bigger concern than inflation for FMCG firms: Godrej Consumer Products

Amid the widespread regulatory actions like the ban on single-use plastics, Sitapati said banning plastics is not the answer to the current challenges.

godrej consumer
The company announced that it will be investing Rs 100 crore towards sustainability initiatives over the next three years. (File)

FMCG player Godrej Consumer Products (GCPL) on Tuesday said about half of Indians have cut back on discretionary spends because of incomes being hit during Covid pandemic.

The affected people are rebuilding their savings which got exhausted or decreased on medical or funeral expenses during the pandemic, and this phenomenon of cutting discretionary spends is a bigger concern than inflation to the Fast Moving Consumer Goods (FMCG) industry, a top executive of GCPL said.

The comments come at a time when headline inflation has been hovering near 7 per cent levels, much above the policymakers’ comfort level for many months now, which has led to many companies resorting to strategies like reducing packaging sizes or increasing prices to maintain profits.

“There was hyperinflation, which was a result of both Covid and Ukraine etc. That seems to be normalising. We anticipated it. So none of us took up prices anywhere close to the inflation so you don’t have a drop,” GCPL’s managing director and chief executive Sudhir Sitapati told reporters.

Citing his interactions with people on the ground, Sitapati said the pandemic-related aspects drilled a hole in people’s savings and as they rebuild savings, they are cutting discretionary expenses.

When asked how big the number of such people, Senapati explained that this trend is visible among people whose incomes have become uncertain because of the pandemic and termed it to be a “huge” quantum of people comprising half of the country’s population of over 1.3 billion.

This has been a global phenomenon and India has “escaped relatively lightly” from Covid, Sitapati said, adding that the ongoing impact on discretionary spends will not be a long-term one.

Meanwhile, the company announced that it will be investing Rs 100 crore towards sustainability initiatives over the next three years.

Sitapati elaborated that this will include creation of waste recycling infrastructure in cities, communication efforts on educating people about the ill-effects of plastic and also research and development on looking at alternatives of packaging.

The company has launched a mix-it-yourself bodywash concentrate which uses just 16 per cent of the plastic for packaging than what would have been otherwise used, through an offering christened ‘Godrej Magic Bodywash’.

Amid the widespread regulatory actions like the ban on single-use plastics, Sitapati said banning plastics is not the answer to the current challenges.

He said plastic has solved a lot of problems and democratised consumption by making it possible for people from different strata of society to use various products.

Activist Afroze Shah said corporates need to do more when it comes to sustainability, and also stressed that it is the management of plastic where we need to direct our efforts.

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