The rural slowdown has claimed its latest victim in Baba Ramdev's Patanjali.
Speculation of the rural slowdown has been making headlines for some time now. While major FMCG brands including Dabur, Britannia and ITC have acknowledged it, the slowdown has claimed its latest victim in Baba Ramdev’s Patanjali Ayurveda. MD Acharya Balkrishna acknowledged the FMCG sector’s sluggish growth and admitted that Baba Ramdev-found company is also reeling under it. “There has been a difference and Patanjali has faced it too. We are gradually coming out of the effects of the slowdown,” Balkrishna said. “However, the market slowdown is one thing and rising interest among masses is another,” adding that the interest in herbal and natural products has increased over time and so has the demand, Acharya Balkrishna told ET Now.
The ayurvedic company’s MD expects that the bumpy road for companies will ease down in the coming months, without telling a concrete timeframe. “FMCG products are consumed by the masses. The interest in these products persist so the market won’t go down in the future,” Balkrishna said hoping for a revival and eventual growth of the FMCG market.
Many FMCG brands have been catching up with the herbal, ayurvedic and organic trend and have launched their products under these labels. This is because of the craze among people for natural products, which is in rural and metros alike, Patanjali MD said. Acharya Balkrishna also admitted that there is struggle and competition for Patanjali in the segment, the TV news channel reported.
The 10,000 crore worth company is going to witness an increase in the valuation as the company has ventured in two-three more areas, Balkrishna said. “The FY19-20 will be good for us, we are hopeful of it,” he said.
What’s with rural slowdown?
After major FMCG brands released their quarter results for Jan-Mar, industry experts have confirmed a slowdown in demand. Companies such as Dabur and Britannia lamented their inability to touch double-digit growth in this particular quarter with Britannia saying that the favourable monsoon and stable government post-Lok Sabha 2019 elections will ease down the slowdown.
According to a Kotak Institutional Equities report, the slowdown that was first seen in the household sector in the last 10 years and the automobile sector since last 5 years has now trickled down to consumer staples such as soaps, toothpaste etch in the past few quarters. “When generally-measured management like HUVR’s uses the term ‘recession’ in its comments in the post-results presser, it generally isn’t a one-quarter blip,” another Kotak report said.