MUMBAI: A contrasting tale may be playing out in the FMCG space. While the arrival of early monsoons is expected to boost consumption of soaps, shampoos, packaged food, and other household staples in rural areas, which have already been growing faster than urban areas for the past five quarters, summer sales of companies are likely to take a hit. This means that firms with a portfolio skewed towards cold beverages, soft drinks, and ice creams are anticipated to see a slowdown in sales. The impact will be larger in urban areas, which have already been grappling with sluggish overall demand. Soft drinks and ice creams, typically seen as impulse categories, also tend to have a higher frequency of purchases in urban markets where the rise of quick commerce platforms allows firms to reach consumers at their doorstep in minutes. Already, summer sales in urban regions had seen a dip due to unseasonal rains in some parts of the country earlier this month, and the early showers will add to it, said Mayank Shah, VP at Parle Products. Since last week, summer sales have dived at kirana stores in certain parts of the country, All India Consumer Products Distributors’ Federation president Dhairyashil Patil said. “Few days’ sales have been lost,” Patil said, adding that an onset of early summers should support total sales for the season.
“While the outlook for rural consumption is optimistic, buoyed by strong monsoons and improved agricultural output, urban recovery, which has seen marginal improvement, will see an impact, especially on summer categories, owing to early rains. Amid these consumption trends, companies with a rural focus are expected to benefit from the early and good monsoon. However, companies focused on urban markets will see limited offtake immediately,” said Manish Anandani, MD at Kenvue India, who expects urban demand revival to set in only after the Sept quarter.Ice cream players are already readjusting their growth projections for the season. “Early rains, storms, and cooler days have made it (month of May) more like the monsoon season rather than peak summer. Consequently, ice creams seem to have dropped from the wish list of consumers a couple of notches for now. This is likely to impact our as well as the industry’s robust growth projections to more modest numbers,” said Mohit Khattar, CEO, Graviss Foods, which holds the master franchise rights for Baskin Robbins in India.The monsoon hit Kerala on May 24, eight days ahead of its normal arrival date of June 1, the earliest onset since 2009. Rains have also advanced to a few other parts of the country. If the spread of monsoon is even and helps improve (crop) yield, it will boost farmer incomes, helping consumption, said Mohit Malhotra, CEO at Dabur India. “We will continue to drive growth in rural through increased penetration in the hinterland while urban demand growth would ride on our premiumisation initiatives in e-commerce and modern trade channels,” Malhotra said. Together with a good crop and govt’s policy reforms, early monsoons can fuel consumption demand, especially in rural India, said Shuvadip Banerjee, chief digital marketing officer at ITC, which is deploying mobile vans to ensure delivery to the remotest corners of rural India.
