Poor rains begin to impact FMCG sales

MUMBAI: The good run delivered by the fast-moving consumer goods (FMCG) sector in the last six months has slowed down from high double-digit


levels to 12.7% in July 2009.

Industry analysts believe this could be an early indication of a weak monsoon with most FMCG companies showing a month-on-month decline in growth. "We need to watch out for sales growth trends in coming months to confirm the impact," said Anuj Bansal, research analyst, DSP Merrill Lynch (India), in a report.

While companies like Procter & Gamble (14.2%), Tata Tea (22.2%) and Godrej Consumer Products (16.8%) registered double-digit growth in July, others like Marico (8.9%) and Hindustan Unilever (6.9%) reported single-digit growths, as per ACNielsen.

HULs sales growth has slowed down from 13% last year to 7%, leading analysts to believe that initiatives taken by the company to improve numbers are yet to deliver. In a bid to return to a growth path, HUL had raised grammage on certain product packs and reduced prices on some others. Its sales growth declined for the fourth straight month in July. In May 2009, the maker of Surf Excel detergents and Lux soaps, had reported a growth of 9%. Considering that HUL draws nearly 45% of sales from rural markets, monsoon factor may have had a hand in slowing down its growth.

Its volume growth remained negative in soaps, laundry, toothpaste, tea and coffee, while its fastest growing categories like skincare, laundry, shampoo, reported single-digit growths in July.

Godrej did not match these price hikes and gained from the price differential created by this, said Bansal. The decline in sales growth of another FMCG multinational, Nestle, too continued with the figures of 12.2% for July.

Colgates growth remained stable at 10% in July, as also Daburs. While the oral care leader further strengthened its toothpaste market share from 49.2% in March to 50%, Dabur too gained share in toothpaste 9.7% to 10% and shampoos 5.7% to 6.5%.