FMCG cos expect 5-15% surge in summer sales; which items sell the most, who will buy | The Financial Express

FMCG cos expect 5-15% surge in summer sales; which items sell the most, who will buy

While cold beverages and ice-creams are the most popular categories during the summer season, brands are betting on snacking foods, rice and rice based products, soaps, etc. for sales surge.

FMCG, summer season, demand surge, sales surge, production capacity, snacking products, beverages, ready-to-eat packages, rice, travel packs, consumption, glucose, family pack, rural demand, urban market, supply chain, inventory, consumer products
With an early onset of summer this year, FMCG companies are expecting a 5-15 per cent rise in demand for products. Image: Reuters

With an early onset of summer this year, FMCG companies are expecting a 5-15 per cent rise in demand for products ranging from snacking products, beverages, ready-to-eat packages, rice products and soap categories. “We expect at least a 15 per cent rise in demand during the next 3 months. With the rising temperatures, vacation, and travel in full swing, we usually see an uplift in demand for snack foods. The re-opening of educational institutions leads to a further spurt in consumption of FMCG and more so in case of impulse foods like confectionery, cakes, and salty snacks,” said Krishnarao Buddha, Senior Head Category, Parle Products. 

Besides, the season will also see increased consumer mobility, which will help the out of home segment and travel packs. “Due to many functions and occasions, consumption of grocery items, especially FMCG products shoot up. This is especially true for travel pack categories followed by the bulk packs which are mostly used in events. Regular consumption products come down during the summer season as people are mostly traveling during this time,” said Amarnath Halember, Executive Director and CEO,  NextG Apex India Pvt Ltd. Generally, summer season brings around 20-25 per cent of annual sales for FMCG companies. For Bikano too, summer months contribute to around 25 per cent of its total revenue

What will sell during summer months?

While cold beverages and ice-creams are the most popular categories during the summer season, brands are betting on snacking foods, rice and rice based products, soaps, etc. for sales surge. “We typically experience a surge in sales during the summer season, as it is a time when people tend to spend more on products like beverages and snacks. We are coming up with a new range and flavors in both traditional and western snacks,” said Manish Aggarwal, Director, Bikano, Bikanervala Food Pvt Ltd. The brand is also planning to enter into new categories in the coming months. 

Dabur, meanwhile, is betting on its beverages and glucose portfolio. “A warmer and longer summer would be good for our summer-centric products, particularly the beverages and glucose portfolio. We are already witnessing good demand for these products and have started building inventory for the same, both at the retail and stockist end,” said Adarsh Sharma, Chief Operating Officer, Dabur India Ltd.

With FMCG, the consumption across categories vary based on factors that work ‘differently throughout  the year’. “The consumption of rice is higher than wheat-related products during summers. We are thus expecting a rise in the usage of rice, soya nuggets and pulses as these are categories that generally do well in summers, which is not considered the best time for fresh vegetables. It’s also a great time for rice business, especially higher-grade rice like Basmati, as it is also helped by the fact that there is Ramzan around this time in April,” said Angshu Mallick, CEO & MD, Adani Wilmar Ltd. As for the edible oil category, around 25 per cent of annual sales come during the months of March, April and May. Adani Wilmar is also betting on its new do-it-yourself format in the food category with the launch of its Kohinoor Biryani Kit and is planning on launching more variants in the segment. 

In the personal care segment, soap usage goes up during the season. Personal hygiene categories such as face wash and body wash will also grow manifold during the summer season. “We expect our soap category driven by brands like Godrej No.1 and Cinthol to see greater demand in the upcoming summer season. Both brands that have combined double digit market share usually see an uptick in demand,” said Sameer Shah, Chief Financial Officer, Godrej Consumer Products Limited. In the household category, kitchen cleaning and laundry products will see a slight downward trend due to less usage during the period of travel whereas travel kits and travel products will see a rise in sales, said Amarnath Halember. 

In terms of preferable price points, FMCG companies opine that Rs 5 and Rs 10 for individual packs and Rs 100 for family packs for the best among consumers. “Typically, Rs 10 is the most favorite price point for the consumers for individual consumption while Rs 100 works well for the large family packs,” said Krishnarao Buddha. For Bikano, Rs 5 price range is the most consumed range. While these are the preferable price points and most of FMCG brands are hoping there are no price changes in the months to come, Parle Products maintained that the brand is considering 3-4 per cent increase in few categories like rusk and cakes. 

Urban vs rural demand

With rural markets recovering in terms of demand and consumption, FMCG companies are looking at better performance in these areas. “The usual contribution for us has been 55 per cent from rural and we expect it to grow faster than urban owing to an increase in disposable income in the hands of the farmers,” said Krishnarao Buddha. FMCG firms are also increasing upfront marketing investments in advertising and promotion in these areas. 

Also, with the government investing more in building road connectivity and infrastructure across the country, aimed towards urbanising the hinterlands, FMCG companies with a strong rural footprint are hopeful of rural demand reporting recovery. 

“We have already invested ahead of the curve to ride the rural demand recovery by expanding our rural footprint, taking our total coverage to over 100,000 villages,” said Adarsh Sharma of Dabur. He also maintained that the brand, through its Project Yoddha, expanded by appointing village level entrepreneurs and has now grown to 14,000 Yoddhas. Adani Wilmar too is focusing on the hinterlands of the country and has launched a range of region-specific pulses.

Preparedness at the back-end

With the expected demand surge during the summer months, FMCG firms are all set and prepared with inventory, supply chain and increased production capacity. “With summer setting in early, we have beefed up our supply chain and our factories are operating at full capacity to enhance availability of our portfolio of beverage brands across the country. We are also utilizing engaging digital campaigns to increase demand through above-the-line advertising,” said Geetika Mehta, Managing Director, Hershey India. Parle Products too has fully equipped with  necessary material and production planning to meet the increase in demand. Dabur too has expanded its capacity at its beverage plant in Pantnagar and has set up a new unit in Indore for beverages and in Jammu for aerated fruit beverages. Bikano too has invested more than Rs 400 crore on its newly launched manufacturing unit in Greater Noida. Adani Wilmar, which keeps adding new capacities every year, maintained, “We add these new capacities in such a way that it takes care of the growth, which takes into account not just the average demand, but also the peak. It’s an ongoing process as we have been focussing on expanding our portfolio and are also moving into rural and other cities.”

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First published on: 20-03-2023 at 17:20 IST
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