The signs are worrying. No wonder marketing honchos of some of the biggest fast-moving consumer goods (FMCG) companies are burning the midnight oil. Not only has growth in demand for their products in the hinterland been sluggish, consumers are opting for local brands.
Bharat Bhushan, who runs a retail store in Dhuri, a small town in the Sangrur district of Punjab, says that he has observed a strong demand for local FMCG products. What would generally be seen as a local isolated phenomenon is now being reported as a national trend.
The new year could not have started on a more tepid note for Hindustan Unilever (HUL), ITC, Britannia, Godrej Consumer Products and Marico among others. When the country’s largest FMCG brand HUL announced its result for the last three months of 2023, the trend was clear. Despite the quarter having multiple festivals, the volume growth of the company remained tepid at 2% and sales declined by 0.3%.
A similar story played out at ITC which saw its cigarettes volume decline 2% in the third quarter of 2023–24 while Marico reported a listless 2% growth in volume. Overall, the volume growth across several top brands has remained near stagnant in the past two years. This prolonged slowdown has clearly dampened the sentiment of investors.
In less than two months into 2024, HUL has seen its share price drop by nearly 10%, ITC’s scrip has dropped by 13% and Marico’s shares have seen a decline of over 3%.
The companies’ leadership, analysts and observers agree on the need for a sustained growth recovery to boost sentiments. While the factors which have dragged down growth may appear transitory in nature, there are indications that top brands are recalibrating their strategies to find a new growth engine which can drive investor trust back.
Double Whammy
Bu hikaye Outlook Business dergisinin March 2024 sayısından alınmıştır.
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Bu hikaye Outlook Business dergisinin March 2024 sayısından alınmıştır.
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