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We hosted virtual investor conference with many FMCG distributorscatering to rural and urban areas in Punjab, Hyderabad, Vishakhapatnamand Vadodara. They held distri-butorships for ITC, Britannia, Reckitt Benckiser, Emami, L’Oréal, Zydus Wellness, VST Industries, etc. Key highlights of our interactions follow.

Demand. Over the last year, demand has been healthy across markets with good price increases. Soaps, detergents and certain packaged foods have seen goodgrowth momentum in the recent past.

Summer products. Demand for seasonal summer ranges have been strong witha healthy uptick in categories such as juices, talcum powders, soaps, etc. However, distributors didn’t see any material change in retailers stocking up for summer
products.

Price increases. A 20% price hike was seen in detergents over the past year. Reckitt Benckiser raised prices in Jan’23 while Unicharm hiked prices in Apr’23. Prices of cigarettes rose ~3% recently.

Several instances of premiumisation have been seen, such as (a) Premium ranges in biscuits launched by Britannia, (b) Most manufacturers are cutting down on smaller packs and focussing on larger packs in Punjab, (c) Most companies are reducing trade margins for lower SKUs while incentivising premium ranges to drive growth.

Consumption shift. There is a shift towards premium and newer brands/ products by millennials. For instance, the younger generation prefers packaged cakes and premium brands. In fact, millennials smoke three brands of cigarettes vs. brand loyalty (one brand) by the older generations.

Competition. With the low barrier to entry , competitors can easily enter markets. As fresh competition has been mounting and share of pocket (or wallet share) is stagnating or declining, Reliance Consumer is gearing up for launches across segments and strategizing its entry. It has already had discussions with several distributors in Hyderabad and looking to soon roll out its ranges. Further, private labels such as Great Value of Walmart and Full Bloom of Vishal Megamart add
to the competition across various markets.

Modern trade and e-com. Dealers in Vishakhapatnam and Hyderabad talked of the considerable impact from modern trade and e-com on their distributorships and markets.

Product launches. Britannia launched coconut water, Everest launched a ready- to-eat range, ITC launched B-Natural juice in a Rs10 SKU at entry price point (vs. Rs20 earlier). While launching such products, companies are discontinuing low-
margin products.

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