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FMCG players expect a good harvest this festive season

Consumer sentiment up, most brands are looking to net around 25-50 % of their business during the festive months, which will start in earnest from August 15

The festive season is very important not just for the country’s economy but also for brands across categories. The season is especially lucrative from a business point of view because of the Indian trait to save up for special occasions and the special prices and sales that brands offer consumers during this time.

Typically, for most brands, about 25-50% of their business happens in these four to five months. This year, owing to a good monsoon and favourable policies, the consumer sentiment surrounding the festive season is seeing an upswing.

B K Rao

“There is definitely a positive consumer sentiment towards this festive season. This is because, so far, we have had a very good monsoon. Last month, there was a little concern, especially in the Hindi belt of Uttar Pradesh (UP), Madhya Pradesh (MP) and Bihar, where there was a monsoon deficit. But in the last 10 days of July, it has rained heavily so the sentiments from the farm-end are extremely positive,” said B K Rao, Deputy Marketing Manager, Parle Products.

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According to Rao, certain government policies that aim to improve farm income have also led to more disposable income in the hands of consumers, which in turn spells a good season of spending.

“There are government policies for improving farm income by almost 1.5 times and this has resulted in a positive impact. The rural or farm income has shot up and this means more disposable income, so we are anticipating better spending this festive season,” said Rao.

Patanjali spokesperson S K Tijarawala said that with GST coming in, there is more accountability and this will lead to more corporate gifting.

SK Tijarawal

“Corporate governance has got a wider platform now after the implementation of GST. The transactions have become transparent and corporate gifting will get a boost out of this. Earlier, corporate gifting was not a part of the GDP officially but now everything is recorded. Earlier, the small traders were not a part of the taxation or the reporting systems. Now, they have to include genuine gifting into their expenses. If they don’t do that, they will have to pay a higher tax,” said Tijarawala.

Rajiv Dubey, Media Head, Dabur India, believes the good start so far will continue to reflect throughout the rest of the year.

"The year has opened on a strong note with Dabur reporting a 21% volume growth in the domestic FMCG business. This is generally a good sign and we expect the upswing in consumer sentiment to continue," said Dubey.

The first quarter has been good for a majority of the brands in the FMCG sector with Unilever showing a volume growth of about 16% and for Marico the number is somewhere between 10-11%.

According to Tijarawala, about 15-20% of business for FMCG brands happens during the festive season.

Tej Katpitia

Commenting on the importance of festive season for their brand, Tej Katpitia, CEO, Sri Sri Tattva, said, "The festive season is an important one for Sri Sri Tattva with products like our Ghee from Cow's Milk, pure Honey and Organic Jaggery surging in demand. A variety of gifting options from our beauty range also contribute to the growth this time of the year. The season brings in upwards of 30% to 35% of our annual domestic sales."

Interestingly, the category also deals in daily use products, the demand for which remains unchanged whether it is the festive season or not. The real difference comes in from products that have the possibility of falling under the “gifting” category.

“In the FMCG category, segments like oral care or hair care are not dependent on the festive season. Toothpastes and hair oil are products people use all year round. However, for products where the option of gifting is involved, the festive season becomes important," said Dubey.

Reiterating the point is Rao, according to whom about 55% of their sales come out of the festive months for the indulgent category.

“With our gift packs gaining popularity, we are seeing more and more contribution from the indulgent variety and the gifting variety. Almost 55% sales in the indulgent category come out of these months,” said Rao.

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