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In-home consumption up as people binge on biscuits
Out of home consumption to take a back seat as Covid-19 keeps people indoors, says a survey
New Delhi: Food categories like biscuits, salty snacks, instant noodles, beverages, edible oils are seeing an increase in demand as in home consumption increases while out of home consumption of FMCG products is expected to take a back seat as the lockdown keeps more people at home.
According to a research by UK broking house, Investec Securities, in the near term, out of home consumption is expected to take a back seat as the lockdown keeps more people at home.
Nestle's Professional division, which posted double digit growth in 2019 is expected to witness some level of slowdown as offices, hotels, restaurants, airlines, educational institutions remain close/ operate at sub-par levels. HUL's ice-cream business will be impacted.
Management in Q4 FY20 results stated, "There was near cessation of sales in some of our out-of-home businesses and ice creams business, right from mid-month, and these contributed to the revenue drop. Our ice cream business started to really see a sharp decline right from mid-month."
Meanwhile, in home consumption has surged. Food categories such as biscuits, salty snacks, instant noodles, beverages, refined edible oils have witnessed a jump in demand. Britannia has witnessed strong demand of biscuits.
April and May has seen strong revenue growth of 20 per cent and 28 per cent respectively.
In the FMCG space, companies are looking to substitute traditional wholesale by increasing stockist count, driving growth through organised wholesale cash and carry and increasing growth through e-commerce.
"In retail, companies like ABFRL, Indian Terrain and Page Industries are likely to re-think their small MBO (multi-brand outlets) strategy and compensate the impact through larger retailers and e-commerce," the research said.
Hand wash, Sanitizers, floor & toilet cleaners, antiseptic liquids have seen a sharp jump in sales in India. Immunity products such as chyawanprash, honey and turmeric have also seen a sharp rise in sales since lockdown started in March.
Most companies believe that the trend will continue and hence, in a scenario where manufacturing capacity is constrained, companies are focussing on these higher demand products.
