FMCG industry hopeful of rural market bouncing back in coming quarters: Emami MD Harsha Agarwal

The Kolata-headquartered group, which has invested in the new age distribution channels such as D2C, said the company would continue to invest and partner with D2C brands for growth.

The Indian FMCG sector is witnessing a degrowth and slowdown in consumption from the rural markets in the last five quarters. (Representative image from Reuters)

FMCG industry is hopeful of rural sales to improve in the coming quarters, while prices of some products could come down as inflationary pressure has started cooling down, Emami Vice Chairman and Managing Director Harsha V Agarwal said on Monday. Government investment towards infrastructure and increased spending on rural areas would enhance job creation and boost development in rural areas, which would be instrumental for the growth of the FMCG sector.

Moreover, after the pandemic, the fundamentals of the retail landscape have changed and companies have invested in digital transformation to be relevant and competitive, Agarwal said while speaking in a session of an event organised by industry body FICCI. The Indian FMCG sector is witnessing a degrowth and slowdown in consumption from the rural markets in the last five quarters. "We are very hopeful. The government's spending behind infrastructure should fuel rural consumption. Let's hope for the demand (to be back) in a few quarters," Agarwal told reporters on the sidelines of the event.

When asked whether he saw green shoots in the rural demand, he said last quarter was "challenging" from the rural perspective. "Green shoots are there in few of the areas but across India, I could not say. But we are hopeful that by next few quarters we can see it," Agarwal said. About inflation, Agarwal said, it is cooling down and he sees prices of some of the products coming down, as the makers would start extending the benefits to the consumer. However, he also added: "It would not be back to where it was earlier."

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The Kolata-headquartered group, which has invested in the new age distribution channels such as D2C, said the company would continue to invest and partner with D2C brands for growth. "In personal care, health care and future agonistic categories, there is a lot of growth in the future. Yes, we have invested in a few D2C brands and going forward also we would partner with them for some opportunities for growth there," said Agarwal, who is also Vice President FICCI & Chair FICCI FMCG Committee.

Asked whether it's a good time for acquisition of new D2C brands, Agarwal said: "It's always a good time... It depends on you, how strategically what you are able to do with that and the value on which you are buying." Emami has bought stakes in D2C brands like nutrition firm Tru Native F&B, Pet Care Startup Cannis Lupus etc. "One or two brands have now started showing in our topline," he said, adding the plan is to grow them further. When asked about the FMCG industry, Agarwal said it is having a volume-led growth as the consumer demand is increasing. "The Indian FMCG industry by 2025 will become a USD 200 billion industry," Agarwal said.

The Indian FMCG industry was estimated to be around USD 110 bilion in 2020, he added. While President FICCI Subhrakant Panda said it is essential for the retail and FMCG industry to continuously adapt and invest in digital transformation. "Retail & FMCG industry holds the potential to be a significant contributor to the economy going ahead," said Panda who is also Managing Director, IMFA Group.

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