Marico’s price cuts yet to push up Parachute volumes

While Marico expects gradual pick-up in volumes in Parachute oil from July-September, the overall volumes for the company seem to be a concern for analysts.

For the entire FY22, the price cut added up to 6%, but volumes didn't pick up.

By Kritika Arora

Price cuts have not helped Marico push volumes of its popular product Parachute coconut oil. Despite a reduction in prices of 2% in the April-June quarter, it saw volumes declining by 2% and value growth sliding 9% during the same period. For the entire FY22, the price cut added up to 6%, but volumes didn’t pick up.

The company’s management attributed this to high inflation which has impacted demand, especially in rural parts, leading to a slow rate of conversion from unbranded to branded products despite the price cut. Further, due to channel inventories, there is a lag of 60 days before there is price discovery by the consumer which leads to better traction, it said.

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However, the company said it has gained market share both in volume and value terms in the category and is confident of volumes reviving going ahead. During April-June, it gained a market share of 90 basis points in rigid packs and has volume growth aspiration of 5-7% in the medium term.

“While the move to branded consumption is slow because of inflation, we continue to lead market share gains. Other organised players have either gained marginal market share or lost market share,” Saugata Gupta, MD and CEO at Marico said during an earnings call.

During Q4FY22 earnings too, Gupta had said the company expects to get back into a rhythm of growth in the second half of the year.

While Marico expects gradual pick-up in volumes in Parachute oil from July-September, the overall volumes for the company seem to be a concern for analysts.

During April-June, Marico’s domestic volumes declined 6% on year majorly because of decline in Saffola oil by over 20%. The company said it was because of the rural stress and severe downtrading happening across categories due to inflation.

The company also said the overall volumes decline during the quarter was below expectations. However, it expects Saffola volumes to revive from the second half of the current fiscal if raw material prices remain stable.

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