Published on 15/07/2017 1:43:02 PM | Source: Emkay Global Financial Services Ltd
FMCG Sector Update Key Takeaways from FMCG companies Annual Reports - Emkay
Key Takeaways from FMCG companies’ Annual Reports
We have gone through 7 annual reports of Consumer Staples companies to get some insights into strategy, outlook for the sector and their respective business segments.
* In FY17, rural demand was sluggish in the early part of the year. Consumption started to witness some uptrend in the beginning of Q3FY17 but faced a hurdle in the form of demonetization.
* Themes discussed in the Annual Reports are: 1) recovery in rural consumption, 2) rising trend towards Ayurvedic products and 3) consumers’ focus on goods that offer health, wellness and convenience.
* Companies believe that GST will be positive for organized players. Soft consumption environment has bottomed out and good monsoon will drive recovery in rural areas. All companies are hopeful of a recovery in H2FY18.
FMCG sector in FY17
Rural demand was sluggish in the early part of FY17 on back of two consecutive quarters of poor monsoon. Consumption started to witness some uptrend in the beginning of Q3FY17 but faced by a temporary slowdown due to demonetization. International business was impacted due to geopolitical issues in MENA region and currency depreciation in Eqypt, Nigeria and Turkey.
Important themes discussed in AR
* Companies are hopeful of a rural recovery.
* While premiumisation trend continues, consumer are focusing on goods which offer health, wellness and convenience.
* Increasing acceptance of Ayurvedic and Herbal products.
Revival in sight led by recovery in rural growth
* Soft consumption environment has bottomed out and good monsoon will play a key role in consumption revival in rural markets. The medium to long term secular trends based on urbanisation, rising aspirations and improving consumption levels are positive for the FMCG sector. The companies are hopeful of a recovery in H2FY18.
* GST will benefit organised players and will create a win-win environment for all the stakeholders. However, there could be temporary transition challenges.
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