Indians Cut Back on Consumer Staples in Times of Cash Crunch
ET Intelligence Group: Indians seemed to have skimped on soaps, hair oils and skin-creams to set aside cash for cigarettes, alcohol, and fashion-wear when currency controls were in place in the December quarter, upending conventional financial wisdom that consumer staples dominate the share of wallet in times of stress.
Sales of soaps and insecticides dropped 6% and 2%, respectively, for Godrej Consumer in the December quarter, and Dish TV’s average revenue per user dropped 6% to ₹ 151 due to delayed re-ordering of services. Similarly, sales of Emami’s Navratna oil and Fair & Handsome whitening creams fell 4% and 18%, respectively, according to data disclosed by the companies. In particular, the quarter marked the lowest subscriber addition for Dish TV in more than three years,
ENCAMPMENT OF GYPSIES WITH CARAVANS, while oral-care company Colgate from its premium offering inwitnessed its sales volume contract creased 12%. Similarly, textile com12% YoY in what is perhaps its pany Arvind’s branding and retail worst-ever performance. division recorded 24% on-year in
By contrast, sales of companies crease in sales. Furthermore, leadmanufacturing non-essential items ing consumer durables company have been quite robust in the Crompton Greaves’ premium fan December quarter. Cigarette manusales increased 40% in t he facturer ITC recorded a flat volume December quarter, and contribugrowth, while India’s largest liquor tion of this division rose to 15% of company United Spirits’ revenues the overall portfolio.
The denominations move hurt the core consumer goods companies, given the reliance of companies such as Colgate and Bajaj Corp. on the rural and suburban markets. Bajaj Corp said its general trade was down about 12% and the market share it had gained in rural markets prior to November 8 fell by 1.5%, erasing previous gains.
Even in urban areas, volumes at canteen stores department (CSD) — centralised stores that sell to defence personnel — declined for many companies. Emani witnessed a 12% drop in volumes from CSD procurement in the December quarter and Bajaj Corp reported destocking from the CSD revenue stream.
Companies with greater dependence on the wholesale channel reported significant stress from the currency-exchange initiative.