While cos like Parle, Marico, Dabur expect a double-digit growth after 4 quarters, apparel cos stay muted
Ratna Bhushan & Rasul Bailay
New Delhi: Indian consumers are spending on packaged food and personal care products but holding back on apparel and fashion in the run-up to Diwali. Companies across sectors are pinning their hopes on a robust festive season, following three muted quarters in the wake of last November’s demonetisation and the July 1 rollout of the goods and services tax (GST).
Large consumer-facing companies, including Britannia, Parle, Marico and Dabur expect a10-15% increase in consumer sales this Diwali, riding mainly on higher spending in rural markets and moderately improved consumer sentiment. That will mark a return to double-digit growth for the first time in at least four quarters. “The consumption momentum is returning even if there is some amount of downtrading in select categories,” said Varun Berry, MD, Britannia. He said stocks in trade channels are near pre-GST levels.
Dabur chief executive Sunil Duggal said the maker of Real juices was expecting a doubledigit increase in sales over the last season, mainly on account of the revival of rural con- sumption following a good monsoon in parts of the country. “But the Diwali quarter will see a higher consumption on a very low base because of last year’s note ban,” he said.
The sharpest rise will likely be in select categories such as large packs of biscuits, choco- lates, juices and gift packs of personal care products.
A spokesperson for confectionery maker Ferrero India, whose products have become ubiquitous in Diwali gift hampers, said the company plans to offer new products.
“Ferrero Rocher has seen a steady growth for the past two years and we expect the same this festive season. We are launching Raffaello and Ferrero Collections this year, expanding our premium gifting category. Ferrero Rocher has turned out to be synonymous with premium gifting in India over the years.”
Abneesh Roy, vice president at Edelweiss Securities, said: “While the consumer sector is still emerging out of demonetisation, discretionary products should see double-digit increase in the quarter, since the yearon-year base is favourable and there is pent-up demand, which should aid volume growth.”
Others such as Parle and Marico echoed the sentiment. Marico managing director Saugata Gupta said: “We don’t see any pressure on consumption for the categories we operate in this season. Disruptions on account of GST have been more to do with supply chain and not so much with consumption.”
Ethnic wear retailers to global fashion brands, on the other hand, said the Diwali season this year has been lacklustre so far. “This is not Diwali but diwala for us,” said the chief executive of a foreign fashion group that sells several brands. He said business is down 15-20% this year compared to Diwali last year.
“It hasn’t been a good Diwali for us this year,” said the head of one of the largest ethnic wear companies in India who said he had been expecting a “good year,” targeting an overall 15% growth. But business is actually down 5-7% this Diwali so far, he said. Anant Daga, MD, TCNS Clothing (maker of W and Aurelia brands), said he was getting a mixed response from retailers. “Some markets per se are not looking so buoyant,” he said. “If you look at any large format chain and at exclusive brand outlets, there are two distinct views. Some say sales are down and some others are doing well. However, the larger response is that Diwali is slow.”
Daga said most of the brands are in any case on promotion. “If you go to any mall, you will see 50% brands are already on some kind of promotion. You get `1,000 on purchase of ₹ 5,000 or 20% off… There are various offers.”
Some analysts said Diwali is falling earlier than usual this year (Oct 19) and that’s not helping retailers as they held end-of-season sales in August. Also, ecomm majors such as Flipkart & Amazon kicked off festive sales with deeper discounts than in last two years.
“Diwali is off to a muted start after a good September,” said a top executive at one of the largest department chains.
Some brands said they’re doing well despite this.
“The market does seem to be slow, but at Biba we are doing quite well this season as we are at 18-20% like-to-like growth,” said Siddharth Bindra, managing director of Biba. “We would have hoped to be better if the market was better. We have done a lot of internal work by improving our marketing and products, and a lot of internal efficiencies are working for us. I think this market is not growing, but we have picked up some market share from competitions.”
Analysts said Diwali is falling earlier than usual this year (October 19), follows end-of-season sale in August and that’s not helping retailers
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