Marico’s India business posts double-digit volume growth in Q3

FMCG major Marico on Monday said its India business delivered a strong performance with double-digit volume growth during the third quarter ended December 31.

Its revenue growth was in tandem with volume growth, the company said in its Q3 update, which provides an overall summary of the operating performance and demand trends witnessed in the quarter.

“The quarter was characterised by a faster-than-expected recovery in consumer sentiment in India, aided by the festival season and a declining Covid-19 graph. The company witnessed strong performance across its portfolio with general trade continuing to grow healthily and rural markets staying ahead of urban,” said Marico.

In the new age channels, while e-commerce continued the stellar run, modern trade after a soft first half, fared better in Q3, it said. CSD continued to decline, albeit improving sequentially, it added.

The quarter was also characterised by inflationary pressure in key raw materials necessitating cutting back of some promotions and taking effective price increases across both Parachute and Saffola edible oil portfolios, Marico said.

Marico said that Parachute Coconut Oil delivered ahead of its medium-term aspiration, while Saffola Edible Oils continued its growth momentum, delivering double-digit volume growth.

Value-Added Hair Oils also exhibited “strength with a broad-based sharp recovery” across sub segments leading to overall double-digit growth for the category, it said. “The foods portfolio continued to witness exponential growth in line with the near-term aspiration, backed by strong performance in both the base foods and the new product launches,” it explained.

There was also a steady revival in discretionary categories with the premium personal care portfolios witnessing improving trends sequentially, however, still posting a modest decline on a year-on-year basis, it said.

The international business, on the other hand, had a resilient quarter with high-single digit constant currency growth, led by double-digit constant currency growth in Bangladesh and recovery in few other markets.

Marico expects to deliver a healthy profit growth on the back of various cost optimization initiatives and judicious A&P spends, it said. The company maintains an optimistic outlook for the rest of the year provided the COVID and the economic situation continues to improve, it added.

“The company remains steadfast in its medium-term aspiration of delivering sustainable and profitable volume led growth, building on strong brand equity across core franchisees and progressively driving and scaling up new engines of growth,” it concluded.

The FMCG industry, which was subjected to supply chain disruptions amid the Covid-19 pandemic, has been ramping up production capacities to meet the demand for hygiene and health products, immunity boosting, packaged food products and other essential products. FMCG companies have also witnessed a spike in sales through e-commerce channels. Growth in the rural market also came to the aid of the sector, with demand trends in the rural market faring better than the urban market.

According to data shared by Nielsen, in the July-September period, rural India recorded a growth of 10.6 per cent in terms of value sales compared to the same period last year. Nielsen estimates that the sector’s annual growth for 2020 will be in the negative single digit (-3 per cent to -1 per cent), but many industry players do not agree with this view. They say that the industry has ended the year on a positive growth trajectory with low single digit growth, making them “cautiously optimistic” about 2021.