scorecardresearch
Follow Us:
Saturday, August 08, 2020

What sold or didn’t in lockdown: Bread, jam up, ice-cream down

While the two-month national lockdown generally dampened spending, fast-moving consumer goods (FMCG) companies saw certain unusual trends in demand in certain product categories, company executives said.

Written by Pranav Mukul , Anil Sasi | New Delhi | Updated: July 23, 2020 12:11:49 pm
Coronavirus, Coronavirus impact, Coronavirus impact on retail sector, Coronavirus lockdown, what people purchased during lockdown, bread, cheese, coffee, jams, Coronavirus sanitisers, Coronavirus handwashes, Indian express FMCG firms saw unusual trends in product demand. (Express photo)

As India remained locked down in April and May to control the spread of the novel coronavirus, people bought more bread, cheese, coffee, and jams — but less fruity cakes. They expectedly bought a lot of hand sanitisers — but not so expectedly, they also bought large quantities of household insecticides.

While the two-month national lockdown generally dampened spending, fast-moving consumer goods (FMCG) companies saw certain unusual trends in demand in certain product categories, company executives said. For example:

* For Bengaluru-based Britannia Industries, sales of bread, cheese, and rusk zoomed, even as its fruity cakes, a traditionally high-turnover product, saw a slump – this is because the cakes are largely staple of school tiffins.

* Hindustan Unilever (HUL), India’s largest FMCG company, saw a surge in the sales of its Kissan jams and sauces in the April-June quarter, and of its Lifebuoy sanitisers and handwashes.

* Mumbai-based Godrej Consumer Products Ltd reported a high turnover of household insecticides, presumably because of the unusually high mosquit infestation in North Indian cities, and the desperate attempt by people to ward off possible dengue or malaria amid the spread of Covid-19, according to company executives.

* Kolkata-based ITC Ltd sold more consumer staples, food and personal hygiene products from mid-April onwards, even as discretionary spending items remained under stress.

* For Gurgaon-based Nestle, the big draws during the quarter were instant noodles and coffee.

Explained: How the Covid-19 pandemic has changed consumer behaviour

Speaking during Britannia’s earnings call for the April-June period, managing director Varun Berry said: “…Bread and rusk grew very aggressively even faster than biscuits, even faster than our overall growth, and dairy, within dairy cheese growths were fantastic”. Suggesting that the growth in sales of bread was on account of it replacing meals for those who were at home, Berry said: “…I think home consumption for bread is almost 100%, home consumption for rusk will be slightly higher than what it is for biscuits”.

On Tuesday, Sanjiv Mehta, HUL’s chairman and managing director, told analysts during a post-earnings conference call that the surge in sales of jams and ketchup was “very natural” during lockdown. “Jams, ketchup they are growing at a very robust pace and it is natural – people are cocooned at their homes. These categories with kids all locked up in homes, there will be demand for these products. It is very natural that there will be a big burst in demand for these products,” Mehta said.

Also read | A ‘never-before’ focus on health, food safety in India: Report

HUL, which reported a 7 per cent year-on-year growth in net profit for April-June (to Rs 1,881 crore), also saw increased demand during the quarter for its health, hygiene and nutrition category, which contributes around 80% to the company’s portfolio of brands.

Nestle India’s milk and nutrition products have seen a pickup, Maggi noodles has surged 25 per cent, and coffee has been doing well, company executives said. In an interview to CNBC-TV18 on July 3, Nestle India managing director Suresh Narayanan said rural areas, as well as Tier-II, III, and IV towns had seen strong acceleration of demand. ITC Ltd, whose FMCG business contributes between 25 per cent and 30 per cent to overall annual revenue, saw a sharp spike in the demand for consumer staples, food, and personal hygiene products. ITC’s hotels business has been suffering badly.

HUL cut its stock keeping units to 20 per cent of pre-Covid levels in April, and has now raised it to about half of pre-Covid numbers. But it has significantly ramped up capacity for sanitisers and handwashes to meet growing demand. According to an investor presentation, the company’s capacity for sanitisers is now 100 times the previous number, while handwash production has been increased five times.

Godrej Consumer Products, which makes household insecticides under the Good Knight brand, witnessed robust sales of these products. “We are… seeing a resurgence in household insecticides (30 per cent of GCPL’s portfolio) from a health point of view, people don’t want to land up in the hospital for malaria and dengue at this time,” Nisaba Godrej, the company’s executive chairperson, had said during its January-March earnings call.

HUL’s Mehta, however, said that the growth witnessed in sanitisers was only sustainable until such time as a vaccine for Covid-19 was rolled out.

Several segments slowed because people stayed at home. HUL said its ice-cream, foods solutions, and vending businesses, which are driven primarily by out-of-home consumption, were massively impacted by the lockdown and closure of restaurants and eateries.

“…It will be fair to assume that it is not going to come back because summer was a big season from an ice-creams perspective, or some of the food solutions that were being supplied to restaurants, some of those elements have been definitely lost,” HUL’s chief financial officer Srinivas Phatak said.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest India News, download Indian Express App.

0 Comment(s) *
* The moderation of comments is automated and not cleared manually by indianexpress.com.
Advertisement
Advertisement
Advertisement
Advertisement