InvestorQ : How has been the volume growth of the FMCG companies and what does it bode for companies like Hindustan Unilever, ITC and Britannia?
Mary Joseph made post

How has been the volume growth of the FMCG companies and what does it bode for companies like Hindustan Unilever, ITC and Britannia?

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sara Kunju answered.
3 months ago
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There have been two positive signals for the FMCG space. Firstly, the IIP data for Jun-20 showed that in user analysis terms, the consumer non-durables were the only segment to record positive growth even as other segments were negative.

Now there is a detailed research report prepared from retail specialist, Kantar, which states that household consumption of FMCG products in the Jun-20 quarter was at a 2 year high. This record performance has come in despite the COVID-19 related challenges.

According to the Kantar report, FMCG segment managed to record volume growth of 4.5%, which is appreciable in these market conditions. However, in value terms, the growth was 8.5%, indicating that companies still retain the pricing power with respect to customers.

Among other segments of FMCG sector, the personal care segment consisting of cosmetics and sanitation products saw 11.1% growth. In addition, home care products like detergents and surface cleaners also showed a healthy growth of 4.6%.

Food and beverages posted minor growth of 3.7%, but the growth in food far outweighed the tepid growth in beverages. What is appreciable is that this quarterly performance was despite restrictions on sale and consumption of food products.

It also appears that FMCG sales is being driven more by rural and semi-urban markets than the metro markets. This trend is likely to be positive for HUL and Britannia. However, for ITC, the cigarette business may continue to be an overhang.

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