Marico sees partial revival of sentiments in FMCG sector in Q2

The second quarter of this financial year saw a partial revival of consumer sentiment in the FMCG sector, the distribution network rebounding back to near pre-Covid levels, the traditional trade and e-commerce continuing to drive growth, along with the rural market continuing to perform better than the urban market, said Marico in its Q2 FY21 update.

This update by the FMCG major provides an overall summary of the operating performance and demand trends witnessed in the quarter ended September 30.

“Although the key raw materials have seen an inflationary trend towards the end of the quarter, we expect to deliver healthy earnings growth on the back of a robust volume growth and a host of cost saving initiatives,” Marico’s statement said.

As lockdown restrictions are progressively easing, the company maintains a positive outlook for the rest of the year provided the ongoing health crisis does not escalate further and economic activity revives steadily, it further stated.

“Given that the medium term potential of the franchises remain firmly intact, we believe the company is on track to deliver sustained profitable volume-led growth, through focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass,” said Marico.

The quarter was characterised by a partial revival of consumer sentiment, which also reflected in the company’s performance across portfolio and channels, the company said.

“Rural continued to perform better than urban aided by the government’s focussed relief packages, relatively lower impact of the pandemic, the resilience of the agricultural sector in a declining GDP context and the consumption shift due to reverse migration of labour. Although there were intermittent supply chain disruptions across locations due to localised lockdowns, the distribution network has rebounded back to near pre-Covid levels. Traditional trade and e-commerce continued to drive growth. While modern trade fell behind, it did improve sequentially. CSD continued to witness steep decline,” the statement said.

Consumer demand

Marico’s India business witnessed signs of revival in consumer demand in the core categories contributing more than 90 per cent of the business and registered robust volume growth in the quarter, said Marico. Its foods portfolio registered an exponential growth in line with the company’s near-term expectations, it said. The company’s discretionary portfolios, which had been affected by the pandemic, performed better than Q1 but continued to face headwinds, the company said.

During the quarter, the company upped the investments behind brand building and advertisement spends were back to pre-Covid levels, it said.

Marico’s international business has clocked mid-single digit constant currency growth. Bangladesh continued to lead from the front with double digit growth while other markets have shown improvement sequentially, it said.

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