Mixed bag for FMCG firms as India braces for extended summer

The India Meteorological Department's bleak prognosis for monsoon has put the spotlight on the heat wave that has gripped most parts of the country.

Beverage, ice cream and dairy product makers are excited because the extended summer means additional business for them. Most of these players expect their June sales to be better than the 15-20 per cent growth they saw in May.

"I expect sales growth to be in the region of 20-30 per cent this June for ice creams. For beverages such as lassi and buttermilk, sales growth is likely to be even more in the region of 35-40 per cent," says R S Sodhi, Managing Director, Gujarat Co-operative Milk Marketing Federation, which owns the Amul brand.

Subhashis Basu, Business Head (Dairy Products) of Mother Dairy, says he sees nothing less than a 25-30 per cent sales growth for June. "The weather has been very hot, and if you compare it with last year, when the rainfall set in by June, the extended summer this year is giving our top line a boost."

Nadia Chauhan, Joint Managing Director of Mumbai-based Parle Agro, the maker of popular drinks Frooti and Appy, says the season has been good. "Especially with the launch of our fruit- based beverages in 250-ml bottle packs, our TetraPak portfolio has grown tremendously. Our expansion in the returnable glass bottle segment has helped us penetrate the market further and expand our footprint in virgin territories. Frooti has grown more than 25 per cent, while Appy has reported a 56 per cent growth rate this season."

According to cola industry sources, sales growth for June might cross the 10-11 per cent mark seen last month. Barring the on-going quarter, sales growth for cola majors Coca-Cola and PepsiCo has been in single digits mainly due to weather conditions, which marred business. The recovery in sales, therefore, in the April quarter has come as a huge relief for these players, say industry sources.

While makers of summer-led fast-moving consumer goods (FMCG) are happy, others such as packaged foods manufacturers are worried.

Dabur, Marico, and GlaxoSmithKline Consumer have all sounded a note of caution. "We are monitoring the situation closely," says Sunil Duggal, CEO, Dabur India. "If rainfall is indeed sub-optimal as indicated by the Met department, then what we are likely to see an agri-commodity inflation, which will put pressure on margins. A drought-like situation, on the other hand, could exacerbate matters. We are in wait and watch mode at the moment."