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Encouraged by volume growth, margin improvement and recovery in rural sales, India's top fast-moving consumer goods (FMCG) companies are now back to their normal growth cycle as they step up investments as well as spending on advertising and marketing. <keyword id="84065" type="General" weightage="20" keywordseo="fmcg-companies" source="Orion">FMCG companies</keyword> are chasing volume growth again after a gap of a few quarters, offering higher grammage and price cuts thanks to inflationary pressures softening on key raw materials for everything from soaps to food items. Hindustan Unilever (HUL), Dabur, Marico, Godrej Consumer Products, ITC, Tata Consumer Products and Nestle reported volume recovery in the March quarter and said they expect a gradual pickup in consumption in FY24. "The prospects of a sustained recovery have strengthened. After five quarters of volume decline, the sector has posted volume growth," Marico MD and CEO Saugata Gupta said in the company's earnings conference call. "Urban consumption has been steady while rural is showing some convincing signs of having bottomed out." Foods continue to drive growth for the sector, while the home and personal care segment also entered positive territory after an extended slowdown. Marico, which owns popular brands like Saffola, Parachute and Livon, reported an 18.7 per cent increase in its consolidated net profit to Rs 305 crore for the fourth quarter ended March 2023 while sales rose 3.65 per cent to Rs 2,240 crore, driven by single-digit volume growth and moderation in commodity prices. HUL said rural areas have shown improvement with higher value growth sequentially. While HUL's volumes continue to fall, the extent of decline has reduced versus last quarter. "The slowdown in the FMCG market is bottoming out. This improvement was led by volumes, which have turned flat in this quarter, versus a mid-single-digit decline in the December quarter," said HUL CFO Ritesh Tiwari in its earnings call. The makers of popular brands such as Rin, Lux, Surf Excel and Pond's said it expects the price-volume growth to rebalance further. "We expect volumes to recover gradually due to high levels of cumulative inflation and the fact that consumption habits typically recover with a lag," he said. For the March quarter, HUL reported an increase of 12.74 per cent in its consolidated net profit to Rs 2,601 crore. Net sales rose 10.83 per cent to Rs 14,926 crore. However, HUL warned the near-term operating environment is likely to remain volatile due to global slowdown risk and uncertainty related to weather phenomena like El Nino and heatwaves. Abneesh Roy, Nuvama Group Executive Director for Institutional Equities, said the outlook for the <keyword id="495979" type="General" weightage="20" keywordseo="fmcg-industry" source="Orion">FMCG industry</keyword> was "positive" with volume growth and improvement in margins for most companies in FY24. "As raw material prices are cooling off, companies shall start paring prices via grammage increase or gradual price reductions. Price growth shall ease while volume growth will improve," he said. Roy also cautioned about the impact of El Nino and the "aggression" from billionaire Mukesh Ambani-led Reliance Industries Ltd, a known disrupter, which aims to be a big player in the USD 110-billion FMCG segment. Meanwhile, Godrej Consumer reported an 11.47 per cent increase in its India revenue to Rs 1,822.92 crore in the March quarter. This was led by volume growth of 11 per cent. Its home care segment, which consists of household insecticides and air fresheners, grew 14 per cent and 17 per cent, respectively. "We expect to build on the current momentum and deliver volume-led growth along with upfront marketing investments and improvement in profitability," said its Managing Director and CEO Sudhir Sitapati. Britannia Executive Vice-Chairman and Managing Director Varun Berry also expressed optimism. "Volume growth will be certainly much better than this year," he said. On commodity prices, Berry said there is deflation in prices of palm oil, laminates and corrugated material for packing but flour and milk prices are soaring. "There are certain brands and certain packs where we have already initiated price reductions or promotions," he said. In the March quarter, Britannia reported a 47.53 per cent jump in consolidated net profit to Rs 557.60 crore. Its revenue from operations rose 10.93 per cent to Rs 3,892.02. Similarly, Dabur reported volume growth of 11 per cent during the March quarter and 14 per cent for FY23. Its quarterly net profit was Rs 292.76 crore and revenue from operations stood at Rs 2,677.8 crore. "Despite near-term concerns around inflationary pressures, we plan to accelerate the growth momentum by continuing to invest in brand building, innovation, and capabilities that will drive growth," said Dabur India CEO Mohit Malhotra. Other companies also recorded growth. ITC's revenue from the FMCG segment rose 19.34 per cent to Rs 4,951.17 crore from Rs 4,148.62 crore while EBITDA jumped 76 per cent. Nestle, the maker of Maggi, Kitkat and Nescafe, reported an increase of 24.69 per cent in its net profit to Rs 736.64 crore in the March quarter. Sales rose 20.43 per cent to Rs 4,808.40 crore. Tata Consumer reported a 21.12 per cent rise in its consolidated net profit to Rs 289.56 crore. Its revenue from operations was up 13.96 per cent at Rs 3,618.73 crore. Tata Consumer said it recorded growth in the India beverages business and food. It had a "strong margin growth and strong topline growth driven both by volume and price," the company said in its earnings call. "We have started seeing volume growth coming back. The impact of inflation and monetary tightening on economic growth and demand seems to be slowing down, but I would keep my fingers crossed and monitor it closely," said Tata Consumer MD and CEO Sunil D'Souza. "In the near term, we are seeing stability." 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FMCG makers expect sustained recovery in volume and margins with price reduction in FY24

<ul><li>Olectra Greentech is the largest <keyword id="12313326" type="General" weightage="20" keywordseo="electric-bus-maker" source="Orion">electric bus maker</keyword> in India. </li><li>It is a Hyderabad-based company and had recently announced setting up a massive 150-acre manufacturing facility to fulfill its growing order book. </li><li>Over the next year, the company says it plans to start manufacturing electric trucks, in addition to three-wheelers and buses. </li></ul>Hyderabad-based Olectra Greentech has quietly made its shareholders rich over the past year. An investment of ₹10,000 in the company exactly 12 months ago is now worth ₹67,000, which is a handsome return regardless of any other factor. Shares of Olectra Greentech were marginally up today (January 4) as of 12:30 p.m. <div type="image" title="Olectra Greentech 01_01_21 to 04_01_22." msid="88685123" hostid="261" caption="&amp;lt;p&amp;gt;Olectra Greentech share price over the past 12 months&amp;lt;/p&amp;gt;"></div> <cmsannotation type="cmsannotation" annotationid="What does Olectra Greentech do?" comment="subhead" text="What does Olectra Greentech do?">What does Olectra Greentech do?</cmsannotation> Olectra Greentech is the largest manufacturer of electric buses in India, with a market share of around 40%. It has been making electric buses in partnership with BYD, China’s largest electric vehicle maker. In December 2020, the company <a href="https://economictimes.indiatimes.com/industry/renewables/olectra-greentech-to-set-up-indias-biggest-electric-bus-factory-with-10000-units-capacity/articleshow/88211313.cms">announced</a> that it is setting up a massive electric vehicle manufacturing plant on the outskirts of Hyderabad, with an initial outlay of ₹600 crore and a capacity of 10,000 units. The plant will be set up on a sprawling 150-acre land. At the time of the announcement, Olectra also revealed that it is currently in the process of fulfilling orders for 2,000 electric buses, which is worth ₹3,000-3,500 crore. <cmsannotation type="cmsannotation" annotationid="Why is Olectra Greentech’s share price surging?" comment="subhead" text="Why is Olectra Greentech’s share price surging?">Why is Olectra Greentech’s share price surging?</cmsannotation> <keyword id="6354973" type="General" weightage="20" keywordseo="electric-vehicles" source="Orion">Electric vehicles</keyword> are the buzzword today, and there’s more than one reason for this. For the government, it’s about reducing the reliance on crude oil imports and pollution, and for the common man, it’s about reducing the impact of perennially rising petrol and diesel prices. As an investor, this presents a great opportunity to bet on stocks and companies which are into innovative battery technologies, or supply components for electric vehicles. We have seen a few companies like Sona Comstar make a blockbuster debut on the stock exchanges, making the most of the IPO boom and the growing interest in electric vehicles. But more than the idea of electric vehicles, Olectra Greentech’s strong fundamentals have played a big role in the company’s shares delivering multifold returns in the past year. Here’s how the company’s financials look like over the past five years: <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Particulars </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">2016-17 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">2017-18 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">2018-19 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">2019-20 </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">2020-21 </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Revenue </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹104 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹161 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹170 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹200 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:bottom;background-color:#d9d9d9;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹281 crore </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">Net profit </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹8 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹8 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">-₹15 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹13 crore </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:bottom;padding:0pt 5.75pt 0pt 5.75pt;overflow:hidden;overflow-wrap:break-word;">₹8 crore </td></tr></tbody></table> Source: Company reports <cmsannotation type="cmsannotation" annotationid="What does the future hold for Olectra Greentech?" comment="subhead" text="What does the future hold for Olectra Greentech?">What does the future hold for Olectra Greentech?</cmsannotation> At the moment, Olectra’s chairman KV Pradeep says that the company has submitted bids for tenders for 6,000 more buses. Just yesterday, the company announced that it has won a bid for supplying 50 electric buses to a government transport authority. But the company is also looking beyond just electric buses – it has teamed up with a truck maker to develop electric trucks, with plans to start manufacturing them in 2022-23. Pradeep also mentions that the company is not reliant on BYD for technology anymore, thanks to an in-house research and development department. The new 150-acre manufacturing facility will be used for manufacturing electric buses, trucks and three-wheelers, the company said. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/infoedge-and-zomatos-deepinder-goyal-invested-money-in-geniemode-10-month-old-tech-startup/articleshow/88683920.cms">After Deepinder Goyal and Kunal Shah, Info Edge backs this 10-month-old tech startup</a> <a href="https://www.businessinsider.in/business/corporates/news/saffola-parachute-oil-maker-marico-sees-poor-demand-from-customers-amid-high-inflation/articleshow/88682276.cms">Marico is paying the price for rising inflation because its buyers aren’t able to</a> <a href="https://www.businessinsider.in/tech/news/this-smart-collar-lets-you-track-your-dogs-health-and-location/articleshow/88681461.cms">This smart collar lets you track your dog’s health and location</a>

Shares of this electric bus maker have surged 540% in the last 12 months

<ul><li>Marico’s India Business delivers a volume growth of 21%.</li><li>More than 90% of the company’s domestic portfolio gains market share. </li></ul>In Q1FY22, Marico’s revenue from operations grew by 31% YoY to ₹2,525 crores (USD 346 million) with underlying volume growth of 21% in the domestic business and constant currency growth of 21% in the international business. In India, the FMCG giant witnessed positivity in the demand sentiment until late April, when stricter mobility restrictions were once again imposed in various states in response to the rising severity of the second COVID wave. Unlike the first wave, the pandemic affected deeper pockets of the country, but Marico’s business was not as disrupted as in the last year given that supply chains were able to weather localized and staggered lockdowns and retail stores operated for certain number of hours during the day. Growth in key portfolios also witnessed some impact due to relatively higher salience in South and West India, which saw heavier caseloads and extended lockdown restrictions. In addition, there was also a marginal correction (2-3% impact) of the historical revenue skew from Q1 towards the previous quarter (Q4FY21). Traditional trade continued to perform well with rural and urban growing in tandem. E-Commerce maintained its accelerated growth trajectory, while Modern Trade could only recover partially as lockdown-like curbs were back into effect in various states. CSD grew on a low base. The International business posted a strong broad-based recovery relative to the varying levels of impact in each of the markets in the base quarter. This was despite signs of moderation in demand witnessed due to the resurgence of COVID in Bangladesh and Vietnam towards the end of the quarter. Gross margin was down 759 bps YoY given the stark contrast in the cost of inputs consumed in the two quarters, as pricing interventions in the core portfolios could only partially alleviate the inflationary pressure. However, operating leverage benefits reduced the drop in EBITDA margin to 522 bps YoY. As a result, EBITDA was up 3% YoY and recurring PAT was up 8% YoY. Reported PAT was down 7%, due to exceptional gain in the base quarter. Other highlights relating to the quarter’s performance are as follows: <ul><li>∙ The core portfolios in the India business continued to log market share gains on a MAT basis, on the back of their market leadership position and strengthening equity.</li><li>∙ Traditional trade continued its healthy run with both urban and rural growing by 17% in volume terms. E-Commerce grew 61%, sustaining its strong momentum. Modern Trade and CSD grew 10% and 56%, respectively. ∙ Parachute Rigids grew 12% in volumes, posting growth in both core and non-core markets. The brand continued to gain volume market share of 80 bps (MAT Jun’21).</li><li>∙ Value Added Hair Oils grew 34% in volumes with each of the key brands clocking double-digit growth. The Company gained 70 bps volume market share to 37% (MAT Jun’21)</li><li>∙ The Saffola franchise, comprising Refined Edible Oils and Foods, delivered 24% volume growth and 60% growth in value terms. Saffola Edible Oils delivered low double-digit volume growth despite a strong base, on the back of investment in new markets and increasing household penetration. Saffola Foods grew by more than 100% in value terms, augmented by the new launches over the last 12 months. The base Oats franchise grew by 59% in value terms backed by increased penetration and market share gains. Saffola Honey continued to grow briskly on a sequential basis, and has garnered double-digit market share in key Modern Trade chains and consolidated 25%+ market share in E-Commerce. Saffola Oodles and Saffola Mealmaker Soya Chunks have been scaling up well.</li><li>∙ The Premium Personal Care (contributing less than 5% of revenues) recovered sharply on a low base but was still below pre-COVID levels, as discretionary consumption remained soft.</li><li>∙ In the International business, Bangladesh clocked 9% constant currency growth. South East Asia delivered 16% constant currency growth. MENA and South Africa recovered smarty on a low base.</li><li>∙ Advertising &amp; Sales Promotion grew by 27% YoY as the Company actively invested in its core franchises and recent Foods innovations, while maintaining a low-key in discretionary categories.</li></ul>

Marico's revenue from operations grew by 31% YoY to ₹2,525 crores in Q1FY22; advertising and sales promotion sees a growth of 27% YoY

<ul><li>Despite a slowdown in 2019, Marico continued to hold on to market share and refrained from cutting down its marketing budgets.</li><li>Its focus on constantly innovating and coming up with premium products while keeping the consumer at the core of all its strategies helped the brand brave the slow times.</li><li>Koshy George, Chief Marketing Officer, Marico Limited walked us through the factors that helped the brand put up a good show in a difficult year, and its marketing game-plan for the year ahead. </li></ul>
 <div type="Video" msid="73255971" hostid="261" title="Koshy George, CMO, Marico Limited walks us through Marico's performance in 2019 and the key areas of focus in 2020" thumbUrl="https://denmark.timesinternet.in/cmslite/api/app/images.jpg?msid=73255971"></div>




It's been just about a year since Koshy George came on board as the Chief Marketing Officer at Marico Limited. While 2019 wasn't particularly an easy year for the overall industry, thanks to the economic slowdown, Marico’s core brands have managed to hold on to their leadership positions. The reason for this growth is perhaps its strong marketing game and the fact that the brand has been focusing on innovation and premiumisation, to solve consumer pain points. Before Marico, George spent close to 15 years in Hindustan Unilever, working on prominent brands like Lifebuoy, Pears, Dove, Lux, Lifebuoy and Sunlight, amongst others. In Marico, George is leading the company’s core hair nourishment brands that include Parachute Advansed, Nihar, Hair &amp; Care, Shanti Amla and Livon, among other brands. For a while now, premiumisation has been helping bridge the gap between what once could be termed as luxury products and products with a more mass appeal. It is also making products more appealing to millennials and a younger set of audience, that is ready to shell out some extra bucks, to get a better consumer experience. Despite being a legacy brand, Marico identified this as a growth area and has been focusing on innovating and coming up with premium products under its portfolio. Why premiumisation will continue to be critical The last year saw the economy witness a slowdown that led to muted growth across industries and FMCG wasn’t untouched by its effects. The effects were most starkly felt in rural markets, which witnessed a substantial dip in sales. However, despite the strong headwinds, Marico succeeded in gaining significant market share in the segments they play in. Its core brands like Parachute and Shanti Amla continued to perform well. “There is a headwind coming in, in terms of the growth of the overall categories shrinking. Competitively, we are doing well, our brands are looking very strong. However, what we need to realize is that the slowdown is here to continue and in such a scenario, how do re-tweak our strategies and get people back to help grow the category,” says George. In such a scenario, what does a marketer do, to protect a brand from being impacted adversely? The answer, George shares, lies in ensuring that consumers get better value from their products. “One of the things we are looking at differently is how do we pass on more value to our consumers? There is obviously some price or promotions we have initiated in the market that ensure that people get the right value at a time like this. Moreover, if you look at the other spectrum, there are channels like modern trade and e-commerce that continue to grow and premiumise. So at that end of the spectrum, we are looking at getting more premium innovations to drive growth there. So we are looking at very different approaches in different parts of the market,” he explains. Livon and its growth story When it comes to the hair serum category, Marico had a clear first-movers advantage when it launched Livon. Years after its launch, despite the category getting cluttered with the entry of a lot of national and international brands, Livon has managed to hold its own. Today, the brand holds about 70% of the serum category. Speaking about Livon’s growth trajectory and the factors that have helped the brand hold on to its leadership position, George says, “Livon has done fabulously well and has stepped up growth in the last few years. For Livon, the core task continues to be driving relevance and building the category, considering it’s a very different format. Most of India is still rooted to using oils, so it’s our job to create the market and educate people on when a serum is used and that continues to be our number one focus. So we have got the product at accessible price points. We also continue to work on upgradations while promoting it around our brand proposition of salon finish hair. Thirdly, we are bringing about a lot of innovation. We now have Livon Colour Protect. We are now looking at opening at sub-segments and targeting modern trade and e-commerce more sharply.” George also says that being the market leader gives them the added responsibility of helping the category grow, which is why he is unfazed by the ever-increasing competition in the category. “Competition coming in is always good because it grows the category faster. We are quite sure that we have a pole position building the category and hence it will always work for us. The trick is to keep innovating and that we continue to drive category upgradation,” he adds. Getting the right marketing mix While slowdowns usually directly impact advertising and marketing budgets, Marico refrained from cutting down on their budgets. Explaining why, George says, “We haven’t really tempered down on our marketing investment because we believe that once you start investing on brands, there will be cycles where the markets fluctuate, but if we continue to invest, we will get the benefits in the long-run.” While TV continues to be Marico’s lead medium, Digital has been witnessing a steady growth, in terms of marketing spends. In the last 2-3 years, the brands spends on Digital has almost doubled. However, George explains that the media mix for any campaign would depend on the purpose of the campaign and the kind of audience they want to reach out to. “While for a lot of our mass brands, TV continues to be the lead medium, there will be cases when Digital will take the largest chunk of our investments. Our investments will depend on our brand and the TG we are targeting,” he explains. Moreover, as a part of their digital investments, Marico is also looking at spending more on new-age social media platforms like TikTok. Marico’s marketing game-plan While premiumisation will continue to be a big focus for Marico, it will also continue to work on bringing people present in the unorganized loose oil category into the organized hair-oil segment. “We believe there is a huge opportunity in premiumisation in all the categories across personal care and we will continue to focus on that. We will continue to invest in new brands, new formats and new benefits for our consumers. Equally while we do that, our strength lies in playing in the core of the market which we have successfully done over the years in terms of upgrading consumers from the belly of the market. So it will be a dual strategy but both for me will lead to meeting our growth ambitions,” adds George.

Why premiumisation will continue to be a focus area and growth driver for Marico

<ul><li>Connecting with consumers and other stakeholders requires building multiple bridges, and experience tells us that the strongest bridges are those that resonate on an emotional level.</li><li><keyword id="10027641" type="PERSON" weightage="20" keywordseo="kaushal-satam">Kaushal Satam</keyword>, SVP, Airline Partnerships, Product, Loyalty &amp; Operations at <keyword id="8329814" type="COMPANY" weightage="20" keywordseo="InterMiles">InterMiles</keyword> writes about a few things that can help brands build an affinity for themselves in the minds of consumers.</li></ul>Brand loyalty is a paradox in itself – it is infinitely complex, yet seemingly simple. There are multiple factors and innumerable moving pieces at play when it comes to driving a simple goal: consideration for one brand over another, even when the value proposition is equal. Connecting with consumers and other stakeholders requires building multiple bridges, and experience tells us that the strongest bridges are those that resonate on an emotional level. Driven by emotional chords, brand loyalty is maintained outside of the product value through the gravitational pull of <keyword id="92066" type="ORGANIZATION" weightage="20" keywordseo="Empathy">empathy</keyword>. <keyword id="2946259" type="PERSON" weightage="20" keywordseo="challenging-times">Challenging times</keyword> call for a double dose of empathy and compassion towards evolved consumer needs. The consumer and their immediate needs, as well as other stakeholders and partners in the ecosystem, must be at the center of all business decisions; understanding them is the first step to earning and retaining their trust. Content is key Content is a powerful tool. Empathetic brand content, communicated sensitively during times of crisis, evokes and inspires. It is, hence, more likely to be shared, draws greater engagement and can even spark a change of thought or belief amongst local communities. A recent report by Think with Google stated that in the last one year, 39% of millennials felt that an online YouTube video helped change their perspective while 45% agreed that a YouTuber has inspired them to make a personal change in their life. These findings amplify how generations today are proactively seeking out content that prompts change, as opposed to passively consuming content. Through challenging times, consumers naturally seek out and engage with content that sends across positive messaging and resonates with them, in a particular environment &amp; context. Among FMCG brands, P&amp;G leads with an excellent example; the brand has repeatedly demonstrated how simply empathizing with customers, followed by practical solutions, can speak louder than endorsements glorifying brand features. Their 'Share the Load' campaign targeting the unequal division of household chores, especially relevant during the lockdown, has become a point of discussion in households, youth-communities and workplaces E-commerce major Amazon India’s ‘Aapki Apni Dukaan’ and ‘Apno ka Saath’ are other key examples of successful communication campaigns that have not only acknowledged but also addressed the importance of having a dependable vendor to meet the needs of India’s aspiring entrepreneurs. The campaigns not only reassure the viewer but also empathize with common grievances faced by them. Leveraging genuine emotions, these campaigns have been successful in driving long-lasting fulfilling relationships. Pragmatically innovating At times, the core business takes a backseat, while immediate needs are catered to and communicated. Travel was one of the sectors most affected by the pandemic – especially during the initial months, however brands like South African Tourism used this opportunity to guide consumers with campaigns that said ‘Don’t travel now, so you can travel later’ and ‘Sacrifice now, celebrate later’. The travel industry has evolved to look beyond instantaneous profits, and has taken small steps to instill confidence and build trust. For example, lodges and hotels now provide flexible bookings – allowing trips to be postponed even up to a year – along with low cost cancellations. Hotels now give consumers the option of having their rooms to be completely disinfected one day before their stay, without letting anyone else use the room in the interim. There are also additional visual representations of health and sanitization measures. Many destination brands have also been offering free virtual tours, to engage and inspire – be it a walk around The Louvre in Paris, real-time guided safaris in South Africa’s Kruger National Park, or 360-degree views of the ruins of Inca settlements in Machu Picchu. This displays brand commitment to consumers and society, as well as the drive to provide meaningful solutions for company growth. Getting it right with customer-centricity Consumers show an active interest in content that is reflective of their own personal values and belief system. For a brand to be able to strike the right chord with their consumers, they need to form strong foundations by continually investing time and effort in getting to know their consumers. Brands must explore diverse areas of consumer personas to gain an understanding of habits, influences, emotions, and behaviours. These findings can be leveraged to construct a solid narrative that offers value, is relevant and insightful enough to evoke an emotion and prompt change. Big gestures are non-mandatory; simple, timely and consistent methods of displaying care and concern establishes long-term trust and affinity. It could be as simple as offering free-of-cost contact-less deliveries during t he lockdown, loyalty points for staying safe at home during the pandemic, or sharing a relevant message of hope and harmony amongst consumers. The entire ecosystem matters Brand values and sensitivity must expand past the consumer base to encompass other stakeholders in the ecosystem as well. Partnerships and associations forged during challenging times help brands meet the needs of all employees, vendors and associates – right across the supply chain. Amidst stringent lockdowns, Marico partnered with Zomato and Swiggy for straight-to-home delivery of their products and all essential food items under the Marico portfolio. This ensured jobs for delivery persons at a time when restaurants were shut, while also bringing convenience to the customers’ doorstep. To help the food industry, Zomato recently made takeaway services available at zero commission to its restaurant partners, while also foregoing the payment gateway charges they incur on all takeaway orders. There is strength in togetherness and immense power in empathy. It is what makes leaders and brands stand out from the herd.

Embracing empathy: The key to driving brand loyalty

<ul><li>Consumption gaps between urban and rural markets narrowed down in the December quarter, for the first time in 2023.</li><li>Modern trade saw double-digit growth in consumption, but growth in <keyword id="20479724" type="General" weightage="20" keywordseo="traditional-trade" source="keywords">traditional trade</keyword> slipped sequentially.</li><li>Non-food category volumes grew sequentially but that of food slowed down, led by staples and impulse categories. </li></ul>Even as FMCG sales growth has been moderating on a sequential basis, sales of noodles and biscuits saw an uptick in the rural markets in the December quarter, says a NielsenIQ report. Rural markets too saw a sequential-quarterly decline, but consumption gaps between urban and rural markets narrowed down for the first time in 2023, in the December quarter. The North and West regions contributed to this phenomenon, the report says. “Despite a sequential-quarter decline, the rural recovery narrative continued to evolve throughout the year. In Q4 2023, we observe an uptick in consumption, primarily driven by habit-forming categories (such as biscuits and noodles) in food and essential home products. These categories have thrived despite flat to negative price growth, indicating resilience and sustained demand,” said <keyword id="20476060" type="General" weightage="20" keywordseo="roosevelt-dsouza" source="keywords">Roosevelt Dsouza</keyword>, Head of Customer Success – India, <keyword id="20475890" type="General" weightage="20" keywordseo="niq" source="keywords">NIQ</keyword>. The rural areas are also seeing a growing preference for larger packs, while urban markets see a persistent preference for larger packs, the report said. It says that the FMCG industry experienced a 6% growth in value, attributed to a 6.4% increase in volume. However, on a sequential basis, there is a moderation in consumption growth, it adds. The pricing growth in the overall fell to 2.7% in Q3, due to the price cuts taken across categories by FMCG majors to fight off competition. In the December quarter of last year, it was 10%, as per Nielsen data. FMCG major <keyword id="19948892" type="General" weightage="20" keywordseo="hul" source="keywords">HUL</keyword> said that in Q3, its volumes grew 2% in Q3, but its value growth fell marginally by 0.3%. Marico’s domestic volumes grew 2% during the quarter, with a flat value growth. <keyword id="20021294" type="General" weightage="20" keywordseo="kirana" source="keywords">Kirana</keyword> continue to suffer Modern trade which consists of supermarkets, hypermarkets and such has seen a double-digit growth in consumption at 16.8%. Traditional Trade which consists of kiranas or mom-and-pop stores saw a 5.3% growth in consumption, falling from 7.5% in the Q2 of FY24. “Despite certain challenges, the positive momentum in modern trade adds a promising dimension to the overall market scenario,” Nielsen says. Non-food categories grow faster The volume growth in general is also much faster for non-food categories. Though more units were purchased in food categories compared to the same period last year, non-foods saw more large packs being purchased. The volume growth in the food sector was at 5.3% YoY, but it was at 8.7% in Q2 of FY23. This slowdown in growth is primarily due to staples (such as refined and non-refined edible oils, etc.) and impulse categories such as confectionery. In non-food categories, volumes grew at 9.6% in Q3 FY24 — higher than the 8.7% recorded in Q2. This improvement can be attributed to an increase in rural consumption growth, with a growth rate of 9.8% (vs. 6.7% in Q2), Nielsen says. “Volume growth is attributed to home care products like detergent cakes and bars, washing powder; and personal care like toilet soaps categories in rural areas,” the report said. In urban areas, the non-food sector is witnessing slower consumption growth, with a growth rate of 9.4% in Q3, slightly down from 10.4% in Q2.

Amidst slowdown, noodle and biscuit sales see an uptick in rural areas

<ul><li>FMCG companies are expected to register strong margins in Q1 as they will see the full effect of earlier-taken price hikes playing out. Cooling raw material prices will help. </li><li>Demand for staples have been stable, but the beauty and personal care category has not yet recovered fully. </li><li>The summer has seen a decline or low growth in ice creams and juices due to unseasonal rains. </li></ul>With cooling raw material costs, the FMCG sector is expected to kick in the first quarter of FY24 with ‘good quality’ profits, backed by improvement in margins. Input costs have been cooling over the last few quarters and have either remained stable or seen mild moderation, and companies have not been passing them off very generously in the form of price cuts. “We expect most of the companies to register stronger sequential gross profit margin (GPM) improvement in 1Q24F with input cost inflation cooling down further, high-priced inventory getting consumed and the full effect of earlier-taken price hikes playing out,” said a research report by Nomura. Certain categories such as hair oils, edible oils and soaps had witnessed price cuts in earlier quarters, which will flow through in the first quarter, as per BNP Paribas. Also, new price cuts and promotions were seen in laundry, edible oils and other home care categories during the quarter but no major price cuts were seen in biscuits and salts. Double digit revenue growth expected Price cuts and volume growth for the sector are directly proportional for the sector, and as of now most of growth seen in the sector was pricing-led. But that’s changing, analysts say. Demand from urban areas has been stable, with slight sequential improvement in rural demand as well. Also, the demand for staples have been stable, but the beauty and personal care category has not yet recovered though improving due to the price cuts. All in all, the sector should be able to present a good revenue growth for the quarter – notwithstanding the cooler summer this April-June with unseasonal rains that affected sales of juices and ice creams. “We estimate staples/discretionary (ex-ITC) pack to register 10.2%/8.8% revenue growth. We expect a good quarter from Nestle, Godrej Consumers and ITC and a weak print from Marico,” says a report by Kotak. Antique Stock Broking also expects the FMCG sector (not including ITC) to report early double digit revenue growth with moderation in pricing led growth. ITC is expected to see a fall in revenue as its agri business is expected to see a drop due to high-base effects. Nomura expects Nestle, Tata Consumers and Dabur to report the highest revenue growth YoY, and with ITC and Marico to post lower value growth. FMCG sector revenue growth projections YoY <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nomura </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Institutional Equities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Antique Stock Broking </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HUL </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 9.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITC </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.6%* </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Marico </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dabur </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Godrej Consumer </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata Consumer Products </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11.3% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nestle India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15.7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16.6% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16% </td></tr></tbody></table>Source: Research reports *Kotak has considered standalone results for ITC Price cuts &amp; rising competition The street will closely watch management commentary on pricing, as analysts believe that the sector is poised for a good show in the first half of FY24 with a raw material cost tailwind. “However, in the second half of FY24 we expect revenue growth to moderate as pricing benefits should fade and growth would have to be volume-led,” said a report by BNP Paribas. There has been no aggressive price war as of now in the sector as of now, but if price cuts are not taken by large players in the segment, it might lead to unorganized players gaining market share. In the last one year, many consumers have ‘downtraded’ to unbranded products or local brands during periods of high inflation. “Prices of most stock keeping units (SKUs) have increased sharply over the last two years. Soap and detergent prices have risen 40-50% over that period. So far the price cuts have been limited and largely confined to the value segment. We believe price cuts might be needed to drive volumes,” said BNP Paribas. Without pricing strategies laid out, most FMCG players might see revenue growth challenges re-emerge this year, especially in the second half. SEE ALSO <a href="https://www.businessinsider.in/business/corporates/news/it-companies-like-tcs-infosys-wipro-hcl-tech-q1-2023-24-earnings-preview/articleshow/101482733.cms">IT sector Q1 earnings preview: All eyes on deal wins, revenue guidance cuts</a> <a href="https://www.businessinsider.in/thelife/news/want-your-veggies-to-taste-like-chocolate-a-vr-glass-may-help-trick-your-mind/articleshow/101487079.cms">Want your veggies to taste like chocolate? A VR glass may help trick your mind</a>

FMCG sector Q1 preview — Caught between price cuts and volume growth

<ul><li>From crackers to clothes to basic household items, lower middle classes have been spending very little in the last few months. </li><li>Most consumer companies are seeing sales and volume growth in their premium products while volumes in value buys are truncating. </li><li>The current festive season which reported bumper sales also saw little participation from the lower middle classes as per RAI. </li></ul>Mahadev Samarth (name changed), a firecracker seller from Meerut enjoyed a bumper sales season this year. Yet he has a lot of inventory left over in bijli crackers or match crackers – which never got sold. Not because they were too expensive, but because the <keyword id="15526256" type="General" weightage="20" keywordseo="lower-income-households" source="Orion">lower income households</keyword> that buy such crackers could no longer afford them. “Most of my pricey range of rockets and more were sold but at the lower end, there are barely any sales,” he told Business Insider India. The lower middle classes also seem to have held off their festival celebrations and that’s evident in sales of other goods as well, be it clothes or household items. “Retailers were indicating that items at higher price points were witnessing better sales than discretionary items at lower price points in the month of August, which was also a non-occasion month. This may indicate that the <keyword id="2725447" type="General" weightage="20" keywordseo="lower-middle-class" source="Orion">lower middle class</keyword> may have put a temporary pause on shopping due to inflation,” said a report by Retailers Association of India (RAI) at the end of September. The October sales in general have been robust, as <a href="https://www.businessinsider.in/business/news/retail-sales-jump-19-from-pre-pandemic-levels-west-india-leads-recoveryrai-survey/articleshow/95502977.cms">per RAI’s latest report</a>. The lower middle classes have been becoming tight fisted for a long time now, and even the upbeat festival mood has not changed that. In fact, lagging growth in rural areas (where half of India’s lower middle class resides) and its slow recovery is affecting many large companies in their value buy segment. Price cuts are not helping There is another indicator to tell us the spending habits of India’s vast lower middle class – hawai chappals or the humble flip flops. With prices starting from around ₹100, they are the most value-buy purchases in the footwear segment known for their comfort and longevity. The segment has seen a degrowth of 20% in the last six months in terms of value, as per Relaxo Footwear’s Q2 earning commentary. “So in the shoe division, our growth in the last six months is around 30%. So there is a healthy growth coming in the shoe division, which is sports shoes and sports sandals. So that has grown well, but open footwear, which is Hawaii, has degrown,” said Gaurva Dua, executive director of Relaxo, who also said that they are facing pricing pressures in the segment. At the same time, their sports shoes and out-of-home footwear segments performed well – indicating the dichotomy in spending patterns as seen in the case of cracker sales. Marico too says it has seen its business growing at one end and truncating at the other. And, reducing prices is not helping, indicating either heavy reduction in consumption or downtrading to local or unbranded products. Its popular hair oil brand’s Parachute’s volumes reduced 3% and revenue by 11% in the second quarter. Its price reduced by 8% and the company has rolled out further cuts in Q3, says an Axis Capital report. On the other hand, its premium personal care segment posted a strong 40% year on year increase. The heat of inflation The consumption story which had started to show an uptrend post-lockdowns has been exhibiting an uneven growth. This is especially true after consumer price inflation hit an eight-year high of 7.79% in April this year. Ever since it remained above 7% every month, easing only temporarily to 6.7% in July, until it reached <a href="https://www.businessinsider.in/finance/news/retail-inflation-eases-to-6-7-in-october-from-7-4-in-september/articleshow/95512476.cms">similar levels in October</a>. Even as retail inflation eased to a three-month low in October, <keyword id="67286" type="General" weightage="20" keywordseo="food-inflation" source="Orion">food inflation</keyword> remained at around 7%, with essentials like meat, cereal, milk and vegetables eating into the household budgets of the lower middle classes. And this softened consumption story is showing little signs of recovery if the earnings commentary of consumer product and FMCG companies are to be believed. Dabur too has taken a hit in the second quarter, as around 46% of its revenues come from the value segment, targeted to rural markets. This time, however, its urban growth lagged too, for the first time in six quarters. Unlike Marico which believes that its overall volumes will grow at mid-single digits volume growth in the second half of the year, Dabur expects only a marginal growth. “Dabur’s 2Q rural demand (as tepid with 1% y-y growth) and lagged urban (6% y-o-y growth) for the first time in six quarters, with downtrading to smaller packs visible owing to inflationary pressures. Management expects near-term pressure on volumes to continue, but to be marginally better q-q,” said a report by Nomura. The Indian middle class accounts for around 28% of India’s total population – at 1.3 billion. Of this, the lower middle class makes up for around 14%, as <a href="https://www.livemint.com/news/india/the-anatomy-of-india-s-middle-class-1556088919798.html">per a Mint report</a>. Apart from making up a distinct consumption class, this aspirational segment and its growth momentum is key to <a href="https://m.economictimes.com/news/economy/indicators/middle-60-india-can-help-gdp-growth-to-10-study/articleshow/54725412.cms">the nation’s GDP growth</a>. However, they are also the most vulnerable. In times of most crises, be it inflation or economic slowdown, the lower classes are the first to be affected and the last to recover – a factor that’s now taking a toll on companies and retailers who build their business models around them. (With inputs from Sudhanshu Singh) SEE ALSO <a href="https://www.businessinsider.in/business/corporates/article/tatas-mega-aviation-merger-is-poised-for-flight-but-the-skies-are-not-clear-yet/articleshow/95526116.cms">Tata's mega aviation merger is poised for flight, but the skies are not clear yet</a> <a href="https://www.businessinsider.in/business/corporates/article/nykaas-fashion-foray-and-pipeline-style-biz-model-worries-analysts/articleshow/95405203.cms">Nykaa’s fashion foray and pipeline-style biz model worries analysts</a>

Inflation burns a hole in the pockets of India’s lower income households. From FMCG goods, flip flops to crackers, consumption takes a backseat

<ul><li>Nirmala Sitharaman is all set to make her fourth budget speech as India’s <keyword id="6355261" type="General" weightage="20" keywordseo="finance-minister" source="Orion">Finance Minister</keyword>.</li><li>Stock markets have regained a lot of the recently lost value in the hope that the Narendra Modi government will spend enough money to boost private consumption.</li><li>This article will be updated with the most important parts of Sitharaman’s speech as soon as she starts speaking.</li></ul>Nirmala Sitharaman is all set to make her fourth budget speech as India’s Finance Minister. Stock markets have regained a lot of the recently lost value in the hope that the Narendra Modi government will spend enough money to boost private consumption. This may include income tax cuts as well, according to experts. The first part of her speech focussed on the government’s upcoming programme titled ‘Gati Shakti’. This programme involves big public investment in building modern infrastructure including roads, highways, seamless multimodal transport, and improving logistics networks to name a few. As part of this programme, the budget has allocated ₹20,000 crore to award 25,000 kilometres of highway projects in the financial year ending March 2023. In deference to the request from many states, the outlay of the Scheme for Financial Assistance to states has been increased from ₹10,000 crore to ₹15,000 crore. The allocation for FY23 is ₹1 lakh crore to catalyse overall investments in the economy. The 50-year interest free bonds are over and above the normal borrowings by the states. This will be used for Gati Shakti, rural road projects, town planning schemes etc. The Finance Minister has announced a fund to support startups in agriculture which will be routed via National Bank for Agriculture and Rural Development (NABARD). A credit guarantee trust will create additional credit of ₹2 lakh crore for small businesses. Desh Stack platform will provide API-based certification and help upskilled people find relevant jobs. The Finance Minister proposed the use of drones as a service in select Industrial Training Institutes (ITIs) in all states. A national digital university will be launched, in a hub-and-spoke model, where other public universities will collaborate. To improve access to mental healthcare, 23 tele-mental health centres will be launched, with National Institute of Mental Health and Neuro-Sciences (NIMHANS) as the nodal unit, and Indian Institutes of Information Technology (IIIT) Bangalore providing tech support. ₹60,000 crore budget allocation in FY23 to take piped water connections to 8.8 crore homes. 23 tele-mental health centres will be launched to improve access to mental healthcare. NIMHANS will function as the nodal unit, and IIIT Bangalore providing tech support. PM Awas Yojana, a subsidised housing scheme, gets a budget allocation of ₹48,000 crore. E-passports with embedded chips will be rolled out in 2022-23 to make it convenient for citizens. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/budget/news/minda-industries-sona-comstar-greaves-cotton-amongst-biggest-gainers-as-investors-bet-on-budget-2022-being-ev-friendly/articleshow/89264077.cms">Minda Industries, Sona Comstar, Greaves Cotton amongst biggest gainers as investors bet on Budget 2022 being EV-friendly</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/shares-of-fmcg-companies-rise-on-hopes-of-consumption-boost-for-the-sector/articleshow/89263952.cms">Britannia, Dabur, Marico surge on hopes that budget will leave people with more money to buy stuff</a>

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