FMCG cos fear slump in rural demand if monsoon delays further

NEW DELHI: FMCG companies are worried that a delayed and deficient monsoon would shrink demand in rural areas.

"Rural consumption helps boost bottom lines of FMCG companies...a longer dry spell would begin impacting consumer sentiments," Emami Group Director Aditya V Agarwal told PTI.

Rural markets contribute over 35 per cent the total sales of FMCG products in India.

Dabur India CEO Sunil Duggal, however, said, "Unless there's a drastic delay in rains, we don't expect any serious contraction in demand."

According to Godrej Consumer Products Managing Director Dalip Sehgal, a marginally deficient monsoon will not affect the FMCG demand because higher prices of the agricultural produce will make up for the lower farm output.

However, some FMCG firms are still hopeful of the revival of monsoon in the next couple of weeks and believe that things would improve.

"A lot will depend on the special and temporal distribution of the monsoon during July and August," Godrej Consumer Products Managing Director Dalip Sehgal said.

Asked whether prices of some FMCG goods could go up to make up for shortfall in revenues, Sehgal replied in the negative saying, "There is a no high probability of price increases in the FMCG sector this year," Sehgal said.