General trade channel, also known as kirana stores, recorded sluggish volume growth in single digits in the December quarter in the FMCG space, compared to modern trade, which continued to see double-digit growth rates. Companies such as HUL and Marico, said they have seen modern trade channel outpace general trade channel in terms of growth rates.

This comes at a time, when the FMCG sector, witnessed a sequential dip in growth rates in both rural and urban markets in the December quarter and the premium segment and is growing at a faster clip than mass-market categories.

According to the latest estimates released by NielsenIQ, traditional trade’s volume growth was pegged at 5.3 per cent in the December quarter compared to the same period last year. Volume growth in general trade saw a sequential decline compared to the September quarter, (7.5 per cent). In comparison, modern trade channel’s volume growth was pegged at 16.8 per cent year-on-year, though lower growth was seen in September quarter (19.5 per cent).

Hindustan Unilever’s management, in its Q3 earnings call noted, “Modern Trade is doing well and continues to outpace General Trade. Similarly, volume growth of premium products is significantly ahead of mass products in the market”.

“The prevailing consumption growth pattern, which appears to be more K-shaped, has also led to a continued divergence between how general trade and organised retail has fared, with the former, contending with low business growth and rising costs, resulting in profitability and liquidity challenges in the trade,” noted Saugata Gupta, MD & CEO, Marico Ltd in Q3 earnings call.

The FMCG company is infact, taking measures to boost sales in general trade channels. “Given the heft of traditional retail and its structural significance in a market like India, which employ a lot of people, we have taken concerted steps to alleviate the strain faced by our partners and revitalize the channel, which is very important to rejuvenate the growth, especially in the core,” Gupta stated. He added, that these “initiatives” are expected to have a gradual and positive impact on sentiment in the channel in the coming quarters.

Nestle India, in its recent earnings statement, also noted that organized trade witnessed strong growth backed by festive walk-ins and new product launches.

Meanwhile, FMCG players are also continuing to see double-digit growth rate in the e-commerce channel. Nestle India said that, it witnessed continued growth momentum in the e-commerce channel, which contributed 7 per cent to domestic sales in the December quarter.

For Dabur India, the e-commerce channel’s share was at 8.5 per cent in the December quarter and clocked a growth of 20 per cent. The company, in a recent investor call,said that in the first nine months of the fiscal, e-commerce channel’s contribution was estimated at 9-9.5 per cent and garnered a growth of 30 per cent. 

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