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FMCG companies witness a rise in rural demand

Several makers of consumer products claimed that in recent weeks, there had been signs of a recovery in rural consumption, with volume sales of daily necessities and groceries increasing, pushing up sales for them. In the past four to five weeks, sales of value packs of biscuits have increased by 10% at Parle Products, India’s largest biscuit company, while small packs of premium packs have experienced a 51% increase in sales. The last three to four quarters showed these two segments expanding by 3% and 1-2%, respectively. 

Adani Wilmar, a company that deals in packaged commodities and edible oil, has registered a 10–12% increase in sequential growth in July compared to June.

The recovery will pick up speed now, according to Emami and RSPL Group executives, which owns the Ghari brand of detergent and Venus soap.

“Rural slowdown was a temporary phenomenon and you cannot expect consumers to hold purchase of daily essentials in abeyance for long periods of time,” said Sushil Kumar Bajpai, president at RSPL Group. “We also saw increased penetration in villages which helped recovery.”

India’s villages, which make up 35% of the country’s FMCG sector sales, witnessed growth slow down starting in September as consumers were compelled to buy products at lower prices or stop purchases completely due to rising prices for food, fuel, and other essentials as well as declining wages.

According to Parle Products senior category head, Mayank Shah, value packs and small packs of the premium range are the first to recover following a delay. “Both these have started in rural India and the pace of recovery is improving every subsequent week,” he said.

According to sales tracker Bizom, urban FMCG sales growth decreased by 6.9% in the first two weeks of July, while the reduction in rural sales was quite negligible at 1.7%.

“We are seeing rural sales closer to growth as compared to urban and this could mean that consumption is starting to see a possible revival. Also, there is a definitive shift in the consumption of commodities with sales increasing in double digits,” said Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom.

Industry executives attribute the recovery to a good monsoon, the positive effects of recent agri-inflation, which has placed more money in farmers’ pockets, and the relative lower base of the prior year following bumper sales in 2020 Covid-led reverse migration.

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