FMCG companies hit hard by inflationary pressure, geopolitical tensions

NEW DELHI: FMCG giants, including Dabur and Godrej Consumer Products (GCP) have been hit hard by inflation and geopolitical tensions during the June quarter of FY2023.

Dabur, a major company in the sector, has seen consumption pressure across the sector during the quarter.

This is on account of unprecedented inflation which has impacted the share of the income available for spending on consumer staples, according to the company’s quarterly update released on Wednesday.

However, it said, Dabur is expected to report high single-digit revenue growth on a very high base of 35.4% revenue growth in Q1 FY22.

“This is backed by mid-single-digit volume growth.”

Talking about the different verticals, it said Food & Beverages vertical has seen strong double-digit growth in the quarter and the home and Personal Care portfolio is expected to record high single to low double-digit growth on a high base of 26.1 % growth in Q1 FY22.

It noted, “Healthcare vertical is expected to report a decline over last year’s high base as the business had registered a growth of 30% in Q1FY22 led by the surge of the Delta variant of Covid-1 9 during the quarter.”

Overall, said Dabur, the consolidated revenue is expected to grow at mid to high single-digits but the operating margins are expected to be lower by around 200 bps as compared to Q1FY22.

At the same time, another FMCG major Godrej Consumer, which also posted its quarterly update on Wednesday reiterated that the Indian FMCG industry has continued to remain soft during the quarter as it continued to be hit hard by inflation levels aggravating due to geopolitical tensions.

This has led to successive price increases and impacting volumes, it said.