Now, ITC confirms rural FMCG slowdown; says, sales growth muted due to sluggish demand

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Updated: May 14, 2019 5:52 PM

Major FMCG brands have been witnessing muted growth owing to rural demand slowdown.

ITC, ITC Q4 Result, ITC Profit, ITC Revenue, FMCG Company ITC, Cigarette Sales, Paper Business, Agro BusinessITC Quarter results: ITC confirms rural demand slowdown

India’s FMCG sector is hit by a slowdown in rural demand, as is evident in the quarterly results of major brands including Dabur, Hindustan Unilever, Godrej and Britannia. Joining the chorus now is ITC Ltd, with the FMCG giant in its latest quarterly results confirming that the rural slowdown hit its sales growth. ITC Ltd — the maker of Sunfeast food items and Fiama Di Wills personal care products — said that even though the expectations were high after a growth in the first two quarters, the latter two quarters showed slow expansion. “After a promising first half, growth in the second half of the year, particularly in the last 3-4 months was muted due to tight liquidity conditions and sluggish rural demand,” ITC said in the quarter results report.

Also Read: Forget houses, cars; people don’t even have money to buy hair oils, shampoo, soaps

FMCG brands follow suit

Previously, Britannia had also said that there is a slowdown in demand which the company had hoped to balance out if the monsoon forecasts deliver and India gets a stable government post-Lok Sabha elections. Dabur attributed the demand slowdown to the liquidity issues and a prolonged winter season in North India. The common thread, however, remains the slowdown narrative. Hindustan Unilever, the Indian subsidiary of Unilever, post quarterly results had said that the FMCG sector is ‘‘recession resistant, not recession proof’’. A Kotak Institutional Equities report had earlier said that the statement from the generally cautious HUL hints at worse and the slowdown may be even more severe than was imagined.

ITC sales: Exceptional double-digit growth

While major brands have struggled to achieve double-digit growth in revenues in the last quarter, including Dabur, HUL, and Britannia, ITC has still recorded a 12% growth in its FMCG-others business. The same was delivered by Bingo snacks, Aashirvaad atta, YiPPee noodles and Dark Fantasy Choco Fills in the Branded Packaged Foods Businesses, ITC said.

In personal care products, Engage deodorants, Vivel/Fiama shower gels and body wash and Savlon handwash did well for the company. Also, “the Education and Stationery Products Business posted a strong performance during the year led by ‘Classmate’ notebooks,” the FMCG brand said.

ITC also said that the EBITDA was up for the company by 31% to 228 crore. This was driven by product mix enrichment and enhanced scale.

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