Consumer cos worried as buyers turn cautious

Consumer product makers and retailers have flagged downtrading — or shoppers switching from regular brands to lower priced alternatives and smaller packs — as a key risk that could impact their profitability and volumes this quarter.Executives of retailers and makers of packaged foods, personal care products and alcobev attributed the trend to a sharp decline in consumer sentiment, increasing spending on medical devices and healthcare products, and uncertainty over how long the second wave of Covid-19 will last.“Unlike the same time last year when consumers were doing gourmet cooking at homes, which resulted in double digit surge of packaged, ready-to-cook foods and ingredients, now the consumer sentiment is very shaken up,” said RS Sodhi, managing director at the country’s largest dairy maker Gujarat Cooperative Milk Marketing Federation (GCMMF) that owns Amul.“A lot of the consumer spending is being directed towards medical devices and crucial healthcare,” he said. In-home consumption and pantry stocking of categories like biscuits, salty snacks, instant noodles, frozen foods, beverages and edible oils had surged in double digits in the April-June quarter last year when a nationwide lockdown kept most consumers indoors.82448246While consumers had started pantry shopping yet again in early April as the pandemic situation forced many states to reimpose lockdowns, people subsequently started buying low-priced products and smaller packs of essentials as the pandemic intensified, executives said.“The second wave has severely impacted core consumers in the urban and middle class, for whom now the sentiment is only about survival and a lot of their savings are going in buying medicines and medical equipment, which are being sold in black at heavily inflated prices,” said Arvind Mediratta, managing director of wholesale firm Metro Cash & Carry.He said sales at Metro stores are down by half compared to March. “The sentiment is unlike last year when consumers were indulging in hobbies like specialised cooking and gaming,” Mediratta said.Harsh Goenka, chairman of the RPG Group, on Wednesday tweeted, “After nine months of buoyant consumer demand, I can see a weakness in demand emerging because of poor consumer sentiment due to the raging pandemic, inflation raising its head, medical expenses taking away part of the savings, and, with Covid hitting villages, rural demand affected.”After 9 months of buoyant consumer demand, I can see a weakness in demand emerging because of poor consumer sentime… https://t.co/kw4KKTrXjM— Harsh Goenka (@hvgoenka) 1620204107000Alcobev maker Pernod Ricard, which sells Blenders Pride whisky and Absolute vodka, had reported double-digit growth for the three months ended March, but in April-end it flagged that the resurgence of the Covid-19 is leading to new restrictions.Vinod Giri, director general of Confederation of Indian Alcoholic Beverage Companies (CIABC), said consumers now prioritise spends on healthcare and Covid-related products unlike last year when they were a lot more relaxed even though there was a national lockdown.

from Economic Times https://ift.tt/3b8kVfz