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Is it the Maggi effect or has the consumer become more aware? Industrial production (IIP) numbers for June indicate a sharp decline of 42.7 per cent in the ready-to-eat / instant food mix category, putting it in the “High Negative Contributor item groups.”
But if Maggi is the reason for the dip in the category, what is the trigger for a decline of about 26 per cent in the aerated waters and soft-drinks segment during the month?
Experts say that while the food processing industry has suffered a loss of consumer confidence after the Maggi controversy, especially ready-to-eat food products, macro conditions are to be blamed for the decline in the other category.
“There has been some impact on the overall food processing industry due to the Maggi controversy and this has definitely impacted the growth of the ready-to-eat food category,” said Arvind Singhal, Chairman, Technopak Advisors.
Industry players point to the challenging macro-economic conditions. Sahil Gilani, Director, Sales & Marketing, Gits Food Products, said: “The ongoing macro issues have affected FMCG consumption over the past few months. However, the festival season is round the corner, which could be the road to recovery.”
The aerated water and soft-drinks industry comprises multinational corporations such as Coca-Cola and PepsiCo and local players, including Bisleri.
Sources say that a number of factors led to the slow offtake of soft-drinks this summer. “Weather fluctuations, an excise duty hike, and a slowdown in rural consumption due to lower disposable income led to a fall in sales in the category,” said an executive with a beverage company, who did not wish to be identified.
A Coca-Cola India spokesperson, quoting the quarterly earnings announcement, said: “Unit case volume growth in the quarter reflected 6 per cent growth in China and 1 per cent growth in Japan, partially offset by a mid single-digit decline in India. In India, unseasonable weather during the quarter drove an overall decline in the industry.”
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