Early rains hit FMCG summer sales; Q1 volume growth slows to 3.9%

Demand for daily groceries and household and personal products slowed down to 3.9% volume growth year-on-year in the June quarter, after early rainfall impacted beverages and summer products sales, according to market researcher Numerator (formerly Kantar).

The market had grown 4.8% in the first quarter of FY25.

Sales volume in rural markets rose 3.2% last quarter, significantly slower than 5.7% a year ago, while growth rate in cities remained largely unchanged at 4%, as per Numerator's quarterly report exclusively shared with ET.

The numbers remained largely unchanged since the March quarter, belying expectations of a turnaround during the June quarter due to easing of inflation and income-tax cut this fiscal.

"For the time being, urban areas continue to lead rural growth at both the annual and quarter levels," said K Ramakrishnan, managing director-South Asia at Worldpanel by Numerator. "There are reports of uneven rainfall affecting agricultural output, but to what extent this would impact rural consumption is as yet unclear. For the next quarter...we expect urban to continue outpacing rural," he said.

Within beverages, bottled soft drinks saw 1.5% volume growth last quarter compared to 26% a year earlier, mainly due to unusually early onset of monsoon rains in the peak summer months.

On Tuesday, Varun Beverages, one of the largest franchisees of PepsiCo, said its India volumes declined 7% during the June quarter, but the firm maintained its margins.

James Quincey, global CEO of Coca-Cola, last week said early onset of monsoon curtailed sales of beverages. "In India, after a strong start to the year, volume declined as our business was impacted by early monsoons and geopolitical conflict early in the important summer season," he said at an investor' call.

Numerator said summer season categories even in personal care were impacted by early rains.

While most companies have not announced their June quarter earnings yet, Dabur, Marico and Godrej Consumer Products said they expect gradual improvement in the quarters ahead, supported by easing inflation, a favourable monsoon season and policy stimulus.

Colgate-Palmolive India, which posted a 4% sales decline, said slower demand in cities and increased competition impacted revenues. Tata Consumer MD Sunil D'Souza, in an earnings call, said it expects value-volume growth to be balanced compared to the current growth, which is predominantly driven by value or price growth.