Consumers expand shopping basket in Dec quarter

Buy more than just essential goods as in-home consumption sees a shift, says KIE report

Mumbai: Companies reported moderation in growth of packaged biscuits, flour and sanitizers as consumers went easy on such purchases and expanded their shopping basket to include personal care and discretionary products in the December quarter.

December quarter earnings of India's top FMCG companies gives a sense of how in-home consumption has shifted as the country opened up and consumers bought more than just essential goods, a Kotak Institutional Equities (KIE) report says.

Significant surge in demand for staples and convenience foods witnessed during the lockdown phase ebbed during the quarter with consumers broadening their purchase assortment and lower 'at-home' consumption on the back of increased mobility. As a result, ITC's Savlon range of health and hygiene products sustained its high growth trajectory, albeit at a relatively lower pace as compared to the previous two quarters. Its Aashirvaad flour and Sunfeast biscuits, which had witnessed significant surge in demand in H1CFY, moderated during the quarter. YiPPee! noodles and Bingo! snacks reported strong growth in the quarter, the report added. Marico's Saffola cooking oil and oats reported strong growth during the December quarter. Heightened demand for staples and convenience foods benefitted companies in the first half of the year.

Britannia Industries reported a six per cent growth in Q3 revenues, a climb down from the 26 per cent, year-on-year surge in sales reported in Q1CFY, due to increased mobility and lower consumption in offices, stations. However, the company drove impressive margin expansion resulted in a strong earnings growth.

Sale of hygiene products was more broad-based, with branded sanitizers reporting a sharp dip in sales growth.

Dabur's sanitizer category has become 'commoditised' over the last few months and the momentum is lost.

Dabur India CEO, Mohit Malhotra, said: "The launch of hand sanitizers and some home and hygiene products was contextual to meet the growing consumer need in the initial days of the COVID pandemic. We always knew that the launch was tactical in nature and these would be rationalized with time. The hand sanitizer category in particular has witnessed heightened competition in the recent quarters and there is a surplus capacity now with the category becoming completely commoditised. The recent months have seen a drop in demand for hand sanitizers, and even related categories around sanitizers have not moved well in the last quarter. That said, other hygiene products like hand wash etc continue to perform well." Marico said that launches in the hygiene segment -- sanitizer, vegetable cleaner and out-surface disinfectants, etc -- contributed to 1 per cent of revenue till Q3 CFY. However, going forward, it has consciously withdrawn investments and defocused from this segment. Godrej Consumer Products, that rolled out over 10 new products in the hygiene and home cleaning segment, said the hygiene trend is more "broad based". It expects demand for cleaning products to sustain.

Consumers are also back to buying more discretionary items as well as personal care products as markets opened up and festive-led movement prompted them to spend more.

Hindustan Unilever's beauty and personal care segment witnessed a 9.7 per cent, year-on-year revenue growth in the December quarter aided by price hikes taken in personal wash category. In the June quarter, category sales growth was down 12 per cent.

ITC said that discretionary and 'out-of-home' consumption products witnessed smart recovery buoyed by pent-up demand and increased availability across channels.

Marico's value-added hair oils saw a 21 per cent volume growth in Q3. Its more premium personal care products such as hair nourishment, male grooming and premium skin care, reported sequential revival in demand during the quarter, but posted a 4 per cent volume decline year-on-year.