Oats and honey are healthy foods that Indians buy less of

  • Most families reduce their consumption oatsAnd the honey In addition to inflated a lot cooking oilwhich is chasing consumer goods players such as Mariko.
  • Marico’s cooking oil brand Saffola has suffered the most as the company has had to pass on some of its input costs to customers.
  • Their total volumes dropped to the mid-single digits during the April-June period.
  • Analysts say FMCG companies will have to deal with lower margins and volumes for another two months.

Indian grocery bags are getting smaller, all thanks to the price hikes we’ve seen in the past few months. According to Marico, a leading FMCG company, most households reduce their consumption in the immune-dependent category of oats, honey.

However, cooking oil, which has become the most expensive household essential, is the category that has been hit the most. Marico’s cooking oil brand, Saffola, has been one of the biggest victims of price hikes and supply shocks.

“Savola oils fell by double digits, forcing it to face a rise in domestic consumption in the primary quarter and a significant decline in premium edible oils to a large segment,” the company said in a statement to stock exchanges.

Edible oil prices are up 10-15% since April after FMCG companies had to pass some input cost pressures on to consumers. This was not the only oil sale that affected the company.

The parachute rose slower too
Even the Parachute hair oil brand saw a slight decrease in volume despite the fact that the coconut pulp prices were low and they were imparting the benefits in terms of lower prices. However, there were also positive surprises as value-added hair oils grew in low single digits despite poor consumption sentiment, especially in rural areas.

Overall, their total volumes fell to the mid-single digits during the April-June period.

“In India, the sector continued to see tepid demand as rising retail inflation pressured the share of the consumer goods portfolio. Current trends are that consumers have standardized consumption in some non-core categories and either cut back between brands or switched to smaller packages in core categories. ,” the company said in a BSE statement.

Industry experts say pressure on consumer goods volumes and margins will continue
With volumes lower, Marico decided to maintain its margins in exchange for holding higher sales – after a sharp rise in raw material prices. Most industry experts believe that everything Consumer Goods Companies It will continue to do so for the foreseeable future, and its sales volumes will return only in the second half of the current fiscal year. Despite the higher prices, they will have to absorb some margin pressure as well.

“We believe margin pressure will continue into Q1 FY23 as well as commodity inflation continues into mid-June and volume growth will also be flat. We expect volume growth to return to positive territory in the second half of FY23,” said a report by ICICI. Securities.

Most FMCG companies have also implemented gram reduction, a practice that has become known as shrininflation.

Despite these price hikes, FMCG companies have seen gross margin shrink 200-500 basis points in the past two quarters. Continuous price increases have also deflated demand, particularly in rural areas. Consumers were turning to budget brands and smaller stock-keeping units in the detergent, soap and edible oil categories,” the report said.

Analysts believe that companies with a high proportion of imported goods in their raw material basket will be affected for some time – making brokerages as wary as consumers.

MARICO.NSE is a classic example of the mango business that I cover in my book You Can Assemble … Past Winners with a Track Record But Future Growth Is Missing.. It’s At Best Dividend… These companies hold together for a long time…

– (vivek_mashrani) July 06, 2022

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