Covid 2nd wave likely to boost FMCG sales
- India registering more than 1 lakh daily cases, highest in world
- Consumer staples are already seeing an uptick in demand
- Consumers may stock up biscuits, snacks, edible oils, and staples
- FMCG firms have begun to see brisk sales of their products
- FMCG major Britannia posted stellar sales growth of 26% last year
Though analysts are yet to quantify the extent of impact due to the second wave of the pandemic, global research firm Nielsen has projected higher sales for this year
Bengaluru: The second wave of the Covid pandemic is likely to rev up the sales of daily necessities like groceries and related products though discretionary spend will take a backseat. The FMCG companies operating in the food, staples, and beverages space are expected to benefit from the current wave, experts said. But relocking at many places in the country due to rising Covid cases will negatively impact the sales of those products, required for outdoor activities.
"Just like last year, packaged foods and consumer staples are likely to do well if lockdown curbs are imposed in many places across the country. However, discretionary spend will suffer as consumers will be more conservative in their spending patterns," said a Mumbai-based analyst.
India is going through the second wave of Covid pandemic with more than one lakh cases reported on Wednesday. Many places including big cities like Mumbai, Pune, Bengaluru, Noida have seen some forms of lockdown to contain the spread of the virus.
This has led to a higher stocking of biscuits, salty snacks, instant noodles, frozen foods, edible oils, and other such staples by consumers. FMCG firms like Britannia, ITC, Marico, HUL, Nestle have begun to see brisk sales of their products, industry sources said. Even e-grocery companies like BigBasket and Grofers have started seeing booking of a higher number of slots in cities like Bengaluru, sources added. Last year FMCG major Britannia Industries had posted a stellar sales growth of 26 per cent in the first quarter ended June 2020 amid lockdown measures. Analysts said there is a likelihood of attaining such high growth this year also if the pandemic forces States to announce widespread lockdown measures. April-June quarter of the financial year is one of the best periods for FMCG firms as most sales happen during this quarter.
While consumer staples are already seeing an uptick in demand, discretionary products like hair oil, deodorant, and many more such products are likely to see falling sales if the situation worsens from here. Though analysts are yet to quantify the extent of impact due to the second wave of the pandemic, global research firm Nielsen has projected higher sales for this year. "Growth can be found in the right stores, right categories, right segments, right occasions, and right price tiers. Dynamics are still uncertain but those who are more agile will be the big winners in 2021," the research firm said in a recent report.
Meanwhile, brokerage firm Motilal Oswal said in a report that Britannia's opportunity for growth is significant in coming quarters, with the overall biscuits category estimated to grow in the mid-single digits. "The broad packaged foods market (estimated at $40-50 billion) presents the strongest structural opportunity in India's consumption space. Britannia's FY21 revenue of $1.8billion is a fraction of this addressable market," the report added.