- October 16, 2018
- Posted by: admin
- Category: Daily News
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- India’s consumer goods companies are uncertain about the outlook for demand as below-normal monsoon rain in some states is set to hit incomes in rural areas, which had shown a robust revival in the past three quarters.
- Early optimism about prospects for the June-September rainy season has given way to doubt at India’s biggest consumer goods company. A bad or patchy monsoon impacts the consumer goods sector with a lag, mostly after the third of fourth quarter.
- Between 2008 and 2012, growth in consumer product sales in rural areas was almost double than that of urban markets, helping the overall segment expand about 18%. With deficient monsoon rain in 2014 and 2015, rural consumption growth fell back.
- The trend reversed in the past three quarters, with sales of consumer products in rural markets outperforming urban India by a factor of 1.2, largely on the back of good monsoon rain that resulted in better farm income with a lag.
- The monsoon in 2018 has left 21.4% area of the country moderately to extremely dry, according to India Meteorological Department (IMD) data at the end of the four-month season.
- Overall, however, the southwest monsoon ended with rainfall 9% short of the long period average (LPA), which is considered ‘normal’ by the IMD, thus marking three straight years of adequate monsoon rain.
- While companies still feel government initiatives including higher MSP could boost rural demand, some fear rising raw material prices may squeeze volume growth.
- Over the past decade, sales of branded daily-use products in the nation of 1.3 billion people have increasingly relied on the rural hinterland, home to about 800 million people whose purchasing behaviour depends on farm output.
16-Oct-2018
