Fast-moving consumer goods (FMCG) have said that the progressing monsoon and waning rain deficiency over the past one week will help quicken the revival of rural demand.
Saugata Gupta, chief executive of Marico, said that it is clear that the good monsoon trend we’re seeing will lead to demand revival in rural markets by September and also a base effect will also play out as demand started to taper in the September quarter last year.
The Indian rural segment contributes around 35% to overall FMCG sales in the country and is highly vital for the revival of the overall sector. In the first two weeks after the onset of the southwest monsoon, there was a deficit in the daily normal precipitation level. By June 11, there was a 43% deficit in monsoon rains, as per meteorologists. The rainfall picked up thereafter.
The southwest monsoon, which accounts for nearly 70% of India’s annual rainfall, is the backbone of the country’s $2.7 trillion agriculture-dependent economy.
A better monsoon this year will go a long way in improving income levels in the hinterland and driving up consumer sentiments, “said Adarsh Sharma, executive director, sales at Dabur India. He added that this would help expand deeper into rural markets. Dabur plans to expand its rural coverage to 110,000 villages in 2022–23, up from 90,000 villages now.
Presently, Adani Wilmar has reduced consumer prices of Fortune refined sunflower oil’s one-litre pack by ₹10 following a reduction in import duties on the commodity. Mother Dairy, too, announced a reduction in its Dhara edible oil prices by ₹15 per litre. Several companies, including Hindustan Unilever, ITC, Britannia, Dabur, and Marico, are significantly stepping up direct distribution and expanding last-mile reach in rural markets.
Tata Consumer increased its direct distribution reach to 1.3 million from 0.6 million in the fiscal year ended March. The company, in its annual report, said the number of urban and rural/semi urban distributors had risen by 25% and 400% last fiscal and that it would continue to rise at the same pace. It plans to expand its total direct distribution to 1.5 million outlets this fiscal year.
Rural demand slowed down for three consecutive quarters, starting July last year, impacted by steep inflation and declining wages. The monsoon had arrived on the coast of southern Kerala state on May 29, three days ahead of the June 1 target, but its progress was stalled for over a week.