FMCG sales decline 14.4% in November in post-festive season lull

Sales of fast-moving consumer goods (FMCG) in India declined 14.4 percent in November 2021 sequentially following the festive surge after sales grew 21.3 percent month-on-month in October. According to data from retail intelligence firm Bizom, the sequential blip in numbers came on the back of a reduction in the number of active kirana stores as they’re typically shut on festival days (Diwali) and on the back of the lower stocking due to post-Diwali stock liquidation.

The post-Diwali season is usually referred to as a lull period after a surge of demand that begins with Independence Day sales in August, running up to Diwali. However, on a year-on-year basis, FMCG sales saw a value growth of 10.4 percent compared to November 2020.

According to Bizom, this is a temporary blip. “FMCG sales have had a temporary blip in November 2021 mainly on account of overstocking for Diwali. We're seeing brands offer aggressive trade schemes to liquidate stocks lying in shelves so that they can begin restocking their products back again at kiranas,” Akshay D’Souza, chief marketing officer, Bizom, said.

The category-wise sales figures also point to a festive trend in which categories such as confectionery, which see high demand during the festive season, saw sales fall by 45.9 percent sequentially in November and 15.4 percent YoY.  Sale of commodities such as rice, pulses, etc, which are also consumed in larger quantities during the festive season, also saw a 13.8 percent sequential decline.

Beverages too saw a 23.2 percent decline in sales. This too is a category that sees an uptick in demand during the festive season, especially given that this is offseason for beverage makers.

However, beverage sales grew 15.9 percent YoY, signalling a faster recovery of out-of-home categories. After the first wave in 2020, out-of-home consumption continued to remain low on account of people still working from home and travel being largely restricted.

However, with an increase in mobility and with return to work, categories such as packaged foods are also seeing a strong demand. While packaged food sales declined only 2.2 percent in November from a month ago, compared to November 2020, sales were up over 32 percent.

“Packaged foods are seeing strong demand growth YoY driven by Out of Home Consumption. The increase in people's mobility, higher travel services, return to work etc is helping drive higher consumption of ready-to-eat products,” Bizom added.

A similar trend is seen in personal care as well, which fell 14.4 percent sequentially, while increasing 3.9 percent YoY. One business segment that continues to see a drop in demand is Home Care, driven by reduced consumer interest in hygiene products that was seen during the first wave of COVID.

This also comes on the back of Nielsen data indicating a slowdown in consumption in the July-September quarter on the back of rising raw material prices, leading to higher prices of consumer goods. However, with no respite in raw material inflation, the impact on consumption in the October-December quarter will also be keenly watched.