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00:00 Focus now on the consumption space and FMCG stocks have been showing signs of

00:05 life after quite a while in the market and I am not just talking about Britannia and Americo

00:10 across the pack. There is some positivity because of commentary from the management while their Q4

00:16 numbers have been presented. Now, what is also bolstering this is the recent report by Nielsen

00:22 IQ for the first quarter calendar year. So, the March quarter for Jan, Feb, March. Roosevelt D'Souza

00:30 joining us now for more on that report. Mr. D'Souza, thank you so much for speaking with us

00:35 here at NDTV Profit. Great to have you on. Now, what is interesting and perhaps heartening for

00:43 the industry from your report is that it shows an uptick in rural demand after about 15 months.

00:51 Can you elaborate on what exactly has been seen and how substantial this is?

00:55 Firstly, thank you for having me on the show. I wouldn't say it's like a turnaround that is

01:02 happening in the industry. What we are actually observing is there is an uptick, definitely yes,

01:08 if you look at the quarter on quarter kind of trends, that turned on is what we are experiencing.

01:15 But if I look at this quarter over the same quarter last year, that is the Jan, Feb, March in

01:21 '22, there is also a base effect because there the volumes were very, very low. So, one is the

01:28 base effect which is why we see that rural looks a lot higher than the urban markets at this point

01:34 in time. But on a like-to-like basis, if you look at urban, actually on that basis is really growing.

01:42 Having said that, over the last five quarters, we've seen this constant uptick which is happening

01:47 in rural, which is very interesting and something that we definitely need to watch out for the rest

01:54 of the next three quarters coming ahead of us. Go back to that last line. So, for the last

02:00 five quarters, you've seen a constant upward move in rural spends. Am I understanding that correctly?

02:07 That's right. That's what's happening. Unlike what we saw, let's say in the urban markets over

02:12 the last two quarters, we've seen a kind of a slight amount of slippage, but in the rural,

02:17 there is a consistent move up. Now, even within this, if I'm not mistaken,

02:22 you're seeing greater growth in non-food categories in your health, personal care,

02:28 etc. Isn't it? That's right. And that is actually driving

02:32 the overall, if you look at the consumption that is happening in FMCG, it is driven by the non-food.

02:39 And non-food is one third of the total FMCG. So, even if you see the growth happening in non-food,

02:46 the overall impact on the FMCG industry will still take some time to see that single-digit growth

02:52 that we are seeing on the overall FMCG. Having said that, it is very heartening to see. I mean,

02:59 this recovery was required. And even in food, it is the staples that is actually pulling it down.

03:05 If you look at impulse and some of the other categories, they are still growing. And it's

03:12 staples that is actually pulling it down. And what we are observing in home and personal care,

03:17 it's across. Whether it's the essential home care or the essential personal care,

03:22 they're all healthy double-digit growths. I want to understand if you're seeing a

03:28 premiumization trend at all. This is a big sort of conversation point in the consumption space,

03:34 Mr. D'Souza. Are you seeing signs of that in health personal care? I'm guessing not so much

03:40 in food. And is there any rural-urban split there? Well, I would, I mean, premiumization is a topic

03:48 by itself. And everybody's interested to know more and more about it. I would say premiumization is

03:54 not really driven whether it's home care or personal care or even food for that matter.

03:59 I think within these meta baskets, you'll also find there is some level of innovation that is

04:03 happening and premiumization that is coming in. So even when foods, for example, what we are

04:08 observing in chocolate, salty snacks, coffee, there is a level of premiumization we've seen,

04:13 albeit on a small base on food. We are seeing that there's almost like a 5X uptick on

04:21 premiumization that is happening. And if I look at, I take a step back and look at overall in

04:28 home and personal care, it is the value that has been driven up almost by 1.5 times of what we're

04:34 seeing in food. So it's happening in pockets. It is happening in categories which are high impact,

04:41 high touch categories where consumers are all gravitating towards. And that's where you'll see

04:46 some amount of polarization. There are still the basic and the low price tiers that are doing well.

04:51 With lower unit packs. And then as you go up on the price continent, you're seeing within the same

04:58 categories, brands are also coming out with more premium products which have got a good

05:03 consumer uptake. Just one point on volume growth. Now, when we're looking at all the listed

05:12 sort of large companies and what from their commentary is really enthusing the market,

05:18 the current theme or the consistent theme is that they're expecting volume growth to improve

05:24 in the coming financial year. Are you seeing signs of that, Mr. D'Souza?

05:28 Well, I will say that there is volume growth that is happening. And it is still what is actually

05:36 driving the overall FMCG growth is the consumption. And while we see that in foods,

05:45 it is the volume is driven by smaller packs. In non-foods, it is the large packs that is driving

05:53 it. So there is a volume play, which is why we keep calling out in the NIQ reports that it's

05:59 all a consumption driven market. It's not a price driven market. Just one last question for you,

06:08 Mr. D'Souza, is on the sustainability of what we're seeing in the rural segment. Since you're

06:12 saying from the last five quarters, you're seeing a consistent uptake. Nevertheless,

06:18 rural consumption has been a concern from a while. Do you see this sustaining and growing as a trend?

06:23 Well, my personal opinion, I think with kind of investments that the government is doing,

06:30 whether it's the emrica or the macroeconomic factors, and you can see some of those investments

06:36 going out now and into the near future, that will be an interesting space for us to see.

06:43 We also recognize that if you don't win in rural, it's very difficult for us to win

06:49 overall in FMCG. So, and a lot of our clients and companies, that's where the focus is.

06:56 With the kind of positive investments that we are seeing playing out in rural, that's something for

07:03 us to watch and expect to see some further plays that are happening in rural markets.

Rural Boost For FMCG Sector | NDTV Profit

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