FMCG firms optimistic about rural recovery amid macroeconomic improvements

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February 6, 2024

Major FMCG firms are placing their bets on a gradual resurgence in rural demand for the current year, fueled by improving macroeconomic conditions, sustained government expenditure, and strategic price reductions. Several companies have reported that the industry experienced subdued rural demand during the December quarter, while urban consumption maintained its lead over rural demand.

During the Q3 earnings call, Saugata Gupta, the Managing Director and CEO of Marico Ltd, highlighted that the FMCG volume growth, based on a four-year CAGR, stayed in the low single-digits. Additionally, he noted that the rural and mass categories were “tracking lower” compared to the urban and premium categories.

“So far, while the pace of recovery in consumption has not been on anticipated lines, we remain optimistic of a gradual uptick in consumption trends over the course of the next calendar year, in light of improving macroeconomic indicators, continued government spending, lower inflation and substantial cuts in consumer pricing implemented by large organised players in response to an accommodative and stable input cost environment,” he added.

Hindustan Unilever also observed that the impact of an uneven monsoon on the Kharif crop affected rural incomes and agricultural yields. In its Q3 earnings report, the company highlighted that urban growth continues to surpass rural growth across various industries, including FMCG.

Continue Exploring: Rising competition spurs FMCG firms to strengthen rural distribution networks

“Looking ahead, in the near term, we remain cautiously optimistic. We expect the gradual recovery in market demand to continue, aided by increased government spending, recovery in winter crop sowing and better crop realisations. At the same time, rural income growth and winter crop yields will be key factors that determine the pace of recovery,” said Ritesh Tiwari, CFO and Executive Director, Hindustan Unilever.

During a recent global earnings call, the global leadership of Colgate-Palmolive conveyed a positive outlook regarding the recovery of rural markets in India.

“We’ll see the continued return to the rural segment, the vitality of the rural segment, which will bode well for volume as we look forward,” the company’s Chairman and CEO Noel Wallace stated.

Dabur India has reported the onset of a revival in rural markets, attributing it to factors such as easing inflation, the expansion of its rural distribution footprint, and the strategic curation of a rural portfolio. The FMCG giant highlighted that in the December quarter, rural demand outpaced urban demand by 200 basis points.

Noting that the company’s performance in rural markets is contrarian to peers, Mohit Malhotra, CEO, Dabur India, said, “The gap between urban and rural growth at the FMCG industry level has been reducing, which is a positive sign. So, as the gap narrows between urban and rural growth with prices going up, I think rural recovery is imminent.”

Continue Exploring: Interim Budget 2024 sets the tone for inclusive development, FMCG executives optimistic

S.P. Apparels to bolster portfolio with 51.33% stake acquisition in Young Brand Apparels for INR 95 Crore

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February 6, 2024

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S.P. Apparels

Garment manufacturer S.P. Apparels Ltd is set to acquire a 51.33% stake in Young Brand Apparels Private Ltd, a company with INR 325.91 crore in revenue, for a total consideration of INR 95 crore.

According to a regulatory filing, S.P. Apparels has engaged in a Memorandum of Understanding (MoU) for the acquisition of Young Brand Apparels, a subsidiary of Bannari Amman Spinning Mills Ltd.

Young Brand Apparels, a joint venture between Bannari Amman Spinning and Jacob Industries (USA) LLC and Intimark of Mexico, is a manufacturing and export company and a strategic partner of brands focused in the intimate wear market segment.

Continue Exploring: Budget 2024: Govt approves extension of export incentive scheme for apparel and garments till March 2026

Regarding the reason behind the acquisition, S.P. Apparels stated that it aims to diversify into additional textile segments, enhance its export portfolio, and establish a more comprehensive business model.

The acquisition is expected to be completed by May 31, 2024 subject to regulatory approvals.

Last month, S.P. Apparels entered into a Memorandum of Understanding (MoU) with Bannari Amman Spinning to acquire the latter’s garment unit located at Palladam HiTech Weaving Park in Tamil Nadu’s Palladam. Additionally, the agreement includes the acquisition of 6.43 acres of land with buildings situated at Site No. R-44, SIPCOT, Perundurai in Tamil Nadu.

The acquisition cost amounted to INR 58 crore, with S.P. Apparels having made an upfront payment of INR 10 crore.

Continue Exploring: India’s apparel exports on the rise: CMAI forecasts 10-15% YoY growth in UAE market

Quick-commerce giants grab 30-50% of FMCG sales, kirana stores witness slowdown

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February 6, 2024

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In the last quarter of 2023, around 12 million local grocery stores in India observed a significant slowdown in sales. Meanwhile, quick-commerce companies not only gained a larger market share for impulse purchases but also for bulk purchases of essential items, as reported by consumer goods companies and analysts.

Marico, Dabur, Emami, and Parle, along with industry analysts, stated that general trade, represented by kirana stores, encountered sluggish growth and encountered challenges in terms of profitability and liquidity in the previous quarter. On the contrary, e-commerce exhibited robust growth during the same period, according to their observations.

Marico, known for products like Parachute hair oil and Saffola oats, reported that although general trade channels remained sluggish, the revenue performance of e-commerce channels exhibited robust health.

Quick-commerce platforms such as Swiggy Instamart, Blinkit (owned by Zomato), Zepto, and BBNow, offering delivery within 10-20 minutes, are responsible for contributing 30% to 50% of the e-commerce sales for FMCG companies, according to executives.

Continue Exploring: FMCG giants turn to data forecasting to address online stock gaps in quick commerce

Ayush Gupta, head – domestic market, at consumer staples maker KRBL that sells India Gate rice, said, “We are surprised the way large packs of staples have taken off in quick commerce, which is growing 100%QoQ for us.”

However, he added that the expansion in kirana grocery stores stands at approximately 10%, albeit on a larger base.

Adani Wilmar and LT Overseas have reported strong sales growth in staples packs, including those of 5 kg or 10 kg, on quick-commerce platforms. These platforms were traditionally seen as channels for impulse categories like soft drinks and snacks.

The surge in quick commerce has prompted FMCG companies to introduce numerous product innovations and provide additional consumer promotions, along with festive or ‘big day’ discounts, such as those on Independence Day, through the platforms.

“ITC is engaged in collaborative forecasting for demand management with leading quick-commerce platforms for better demand management,” said Sandeep Sule, divisional chief executive – trade marketing and distribution at the maker of Sunfeast biscuits and Fiama soaps. “In addition, there are regular engagements between ITC and quick-commerce teams to continuously review on-platform availability of products which enables linking of packs across their dark stores and help in increasing the availability of products,” he said.

A representative from Nestle, the manufacturer of Maggi noodles and Kitkat chocolate, stated that quick-commerce platforms currently account for nearly half of the company’s e-commerce business.

“While ecommerce contributed to 6.6% of Nestle’s business for the nine-month period ended September 30, 2023, quick commerce has been driving growth within the segment with almost 50% of the overall ecommerce business being contributed by quick commerce,” the spokesperson said.

According to a January report by ICICI Securities, the continued demand stress in the mass segment and the extended slowdown in the general trade channel have impacted the revenue of FMCG companies during the December quarter, coinciding with the peak festive Diwali quarter.

FMCG companies have stated that they are augmenting the frequency of inventory replenishment cycles to prevent stock-outs. Additionally, they are allocating more stock and actively assessing real-time data in collaboration with the platforms.

Continue Exploring: Indian FMCG sector eyes robust growth in 2024 amidst favorable market conditions

McDonald’s Q4 results show 3.4% sales growth amidst challenges, West Asia boycotts impact performance

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February 5, 2024

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McDonald’s experienced a challenging conclusion to what initially seemed like a promising year, facing declining sales in numerous markets attributed to the impact of the conflict in Gaza.

In the October-December period, global comparable-store sales, or sales from restaurants open for at least a year, increased by 3.4 percent. This figure was below the 4.7 percent growth expected by Wall Street analysts surveyed by FactSet.

Customers in West Asia expressed dissatisfaction when McDonald’s Israel, operated by a local franchisee, announced in October that it would offer complimentary meals to Israeli soldiers. In response, some franchisees, like McDonald’s Oman, announced donations to relief efforts in Gaza.

Continue Exploring: McDonald’s faces intensifying backlash over alleged support for Israel amid Gaza conflict, #BoycottMcDonalds trend gains momentum

Last month, McDonald’s President and CEO Chris Kempczinski issued a warning, stating that misinformation in West Asia and other regions was adversely affecting sales. Alongside customer boycotts, McDonald’s found itself compelled to temporarily adjust store hours or close specific locations due to ongoing protests.

We abhor violence of any kind and firmly stand against hate speech, and we will always proudly open our doors to anyone, Kempczinski said in a LinkedIn post.

The conclusion was unforeseen for the burger giant, marking an unexpected turn in an otherwise robust year. McDonald’s reported a notable 9 percent increase in global same-store sales for 2023. The success of viral marketing campaigns, such as last spring’s Grimace shakes, along with enhanced menu offerings, contributed to a substantial 10 percent rise in full-year revenue, reaching nearly USD 25 billion.

McDonald’s was not the sole US company grappling with repercussions from the recent war. Just last week, Starbucks revealed that it, too, encountered boycotts in West Asia and other regions, stemming from perceived support for Israel.

In the fourth quarter, McDonald’s saw an 8 percent increase in revenue, reaching USD 6.4 billion, aligning with analyst expectations. Simultaneously, net income experienced a 7 percent rise, reaching USD 2 billion.

Excluding one-time items, such as a USD 66 million restructuring charge, the company outperformed analysts’ expectations by earning USD 2.95 per share, surpassing the forecasted per-share profit of USD 2.83.

McDonald’s Corp. shares were flat in pre-market trading Monday.

Continue Exploring: McDonald’s faces challenges in Middle East markets amid Israel-Hamas strife

Pret A Manger expands global presence: Enters South African market in partnership with Millat Group

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February 5, 2024

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Hamza Farooqui with Pano Christou. (Credit: Millat Holdings)

Pret A Manger, a UK-based cafe chain, has joined forces with Millat Group to enter the South African market.

Pret A Manger and the Millat Group have finalized a development agreement, granting Millat Group exclusive rights to operate Pret stores across the entire nation.

The deal comes after their successful introduction of the Circle K convenience store brand into the country.

The accord is in line with Millat’s overarching strategy to expand into the foodservice industry, offering customers a range of fresh, organic, and sustainable choices in accordance with their long-term vision.

Pret A Manger currently operates 650 shops across 18 countries and plans significant expansion in South Africa in the ten years to 2033.

Pret A Manger CEO Pano Christou said, “Bringing Pret’s freshly made food and organic coffee to the African continent for the first time marks a major milestone in our international expansion. Partnering with the Millat Group to launch Pret in South Africa is hugely exciting, with our Johannesburg shop set to be the first of many in the South African market.

“The partnership aligns with Millat’s vision of fostering entrepreneurship within South Africa, driving economic growth and providing a service that will enhance the daily lives of South Africans. We look forward to welcoming customers right across the country in the coming months and years.”

Pret A Manger aims to duplicate its international success, as witnessed in markets like the UK, India, and France, and solidify its position in the food-to-go sector.

Continue Exploring: Reliance ventures into the coffee industry with the opening of Pret A Manger’s first shop in Mumbai

The first Pret A Manger store is set to launch in Johannesburg, with a focus on the urban population.

Following that, the brand intends to set up additional stores in prominent locations throughout major South African cities like Cape Town, Durban, and Pretoria.

Millat Group CEO Hamza Farooqui said, “Pret A Manger has the best in class offering of organic grab and go and a food service offering that stands out. This partnership is in line with Millat’s strategy of bringing global brands into South Africa.”

“We also believe that this is an important step in elevating the consumer experience in South Africa and appreciate the confidence shown by Pret to partner with Millat.”

Farooqui continued, “Pret’s decision to venture into South Africa is a reflection of the country’s vibrant economic potential. I am thrilled to partner with such a powerful brand that not only offers high-quality products but also aligns with our core values of community and service.”

Continue Exploring: Pret A Manger debuts first standalone store in Toronto, introduces diverse menu beyond coffee offerings

GOPIZZA’s growth soars with 50th outlet in India, crosses the 200-store mark globally

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February 5, 2024

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GOPIZZA, Korea’s largest pizza brand, has announced the opening of its 50th store in India, marking the achievement of 200 stores globally. The new flagship store, located in the vibrant district of Koramangala, Bengaluru, is set to showcase a menu that embodies the essence of Korean flavors, aromas, and tastes.

“This launch marks an important milestone that commemorates three years in India and highlights the company’s long-term commitment to growth with 200 stores globally and more expansion in one of GOPIZZA’s fastest-growing markets, India,” said Jae-Won (Jay) Lim, CEO, GOPIZZA Global.

“Our menu has been carefully curated, to introduce the diverse and rich flavours of Korean cuisine,” he added.

Continue Exploring: FMCG giants spice up instant noodle portfolios as Indian consumers crave K-noodles

Distinguished by its inventive design, the flagship establishment in Koramangala introduces a unique semi-dine-in concept, capturing the authentic atmosphere of eateries in Seoul. This distinctive ambiance is crafted to elevate the enjoyment of GOPIZZA’s celebrated Korean menu, showcasing the brand’s gourmet pizzas and pasta specials infused with a Korean twist. Highlights include the fiery Buldak Volcano Pizza, the delightful Seoul Snow Pizza, and the savory Gangnam Bulgogi Pizza. In addition to these offerings, the menu aims to provide patrons with an authentic Korean culinary experience, featuring starters reminiscent of the bustling food streets of South Korea, such as K-fried chicken, Corn dogs, an array of signature Ramyun Bowls, and delightful Korean-inspired desserts.

Speaking on the brand’s expansion plans, Mahesh Reddy, CEO, GOPIZZA India said, “GOPIZZA embraces a versatile business model adaptable to spaces as compact as 50 sq ft, suitable for even placements in convenient stores. Through this malleability, we plan to open over 100 outlets by the end of 2024 in different regions of India and surpass the milestone of 500 stores worldwide, standing true to our commitment to accessibility and diversity.

“GOPIZZA’s aggressive expansion strategy extends beyond traditional formats. Operating across diverse verticals and locations, the brand has its presence in the formats of brick-and-mortar stores, shipment container stores, soon to also be in the form of a dessert cafe, and a food truck around the city. Located in malls, popular shopping streets, and airports, GOPIZZA is also looking into highways,” added Reddy.

Continue Exploring: GOPIZZA makes its debut in Chennai, eyes rapid expansion with 100+ outlets pan-India by 2024

Haryana takes bold step as first state to prohibit plastic bottles for locally produced liquor

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February 5, 2024

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Haryana Deputy Chief Minister Dushyant Chautala announced on Sunday that, beginning March 1, country-made liquor would no longer be sold in plastic bottles.

This move makes Haryana the first state in the country to enforce a ban on the use of plastic.

Chautala, who oversees the Excise and Taxation portfolio, stated that the government attained a 16 per cent growth this fiscal, with GST collection witnessing a 30 per cent increase over the past four years. The total tax collection reached INR 32,456 crore.

Despite initially setting a target of INR 36,000 crore for GST collection, Chautala expressed confidence in meeting the target in time.

Continue Exploring: Haryana to permit large offices to serve beer and wine on their premises, marking a first for India

In the fiscal year 2019-2020, the state government received a sum of INR 6,361 crore in excise duty tax, as stated by him.

In 2023 until July, the excise tax collection amounted to INR 9,687 crore. As of January 28, 2024, the total has already reached INR 9,232 crore. Despite the initial target being INR. 10,500 crore for the excise year, there is optimism that the government will exceed expectations, with the anticipation of a final tax collection of INR 11,500 crore by the end of the excise year.

Barbeque Nation expands footprint with grand opening at Nexus Ahmedabad, marking fourth venture in Gujarat

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February 5, 2024

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Barbeque Nation, a Bengaluru-based restaurant chain, has recently launched a new establishment at Nexus Ahmedabad, as mentioned in a social media post by a mall official.

“Super stoked to announce the association of two major forces. Today, Barbeque Nation opened its doors for customers at Nexus Ahmedabad One in a grand manner with a larger-than-life architecture & design. Looking forward to a successful and lip-smacking journey,” said Karna Pandey, Manager Operations, Nexus Malls in a LinkedIn post.

This marks Barbeque Nation’s fourth venture in Ahmedabad, Gujarat, with previous locations established in Prahlad Nagar, Saral Xperia Mall, and Fiesta TRP Mall in Bopal.

Established in 2006 under the all-you-can-eat concept, the casual dining chain manages more than 200 outlets across India, with an additional four in the United Arab Emirates (UAE), and one each in Malaysia and Oman, as outlined on its official website.

The dining establishment presents patrons with a grill embedded in their table, offering a minimum of five vegetarian and five non-vegetarian mostly pre-cooked appetizers. Alongside this, there is a main course buffet and a variety of dessert options.

It is the only company in the retail sector to achieve a position among the top 10 and is ranked 13th among the best large workplaces in Asia by the Great Places to Work Institute, as stated on the company’s website.

Continue Exploring: Barbeque Nation reports INR 11.60 Crore net loss in Q4, records strong revenue growth of 11.6% to INR 280.23 Crore

Pet care startup Papa Pawsome secures $400K in seed funding led by Indian Angel Network

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February 5, 2024

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Nishita Agarwal, Co-Founder, Papa Pawsome

Papa Pawsome, a pet care brand, secured $400,000 in seed funding in a round led by the Indian Angel Network. Notable investors from IAN, including Ajay Rajgarhia, KRS Jamwal, Jayant Mehrotra, and Rohit Rajput, also joined in the funding.

The startup will utilize the funds to scale operations, expand its offerings, and enhance the overall customer experience. Additionally, the infusion of capital will expedite the development of cutting-edge products, ensuring that Papa Pawsome remains at the forefront of the evolving pet care landscape.

Established by Nishita Agarwal, Papa Pawsome provides an extensive array of products tailored to meet the distinctive needs of contemporary pet-centric households. The startup asserts a portfolio of over 25 SKUs, encompassing hygiene essentials such as shampoos, serums, massage oils, training sprays, and grooming services.

Speaking on the funding, Nishita Agarwal, Co-Founder of the company said, “This funding will help Papa Pawsome realise its vision to become the platform for pet parents seeking quality and convenient pet care solutions.”

With the acceleration of urbanization and the expanding DINK (Double Income, No Kids) population, coupled with an increased desire for companionship post-pandemic, the adoption of dogs has emerged as a prevalent trend, as stated by the company.

“The pet industry is evolving rapidly post the pandemic and is going to be the next baby care industry (the industry isn’t creating babies.. Papa Pawsome is a D2C brand that offers natural petcare products which meet the evolving needs of pet parents and they are building a strong community of Fur Mom and Fur Dad,” said Ajay Rajgarhia, Lead Investor.

Before this funding round, the brand had raised $250,000 in its seed round, with New York-based 93 East Capital taking the lead. OpenbookVC and prominent investors such as Peebuddy founder Deep Bajaj, KRS Jamwal, Mandar Joshi, and Naveen Gupta also participated in the round.

Reliance Retail’s Fresh Signature expands presence in Mumbai with grand opening of new flagship store at Infiniti Mall

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February 5, 2024

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Fresh Signature, the experiential supermarket chain from Reliance Retail, inaugurated its newest flagship store in Mumbai. This marks the 141st outlet of the upscale chain for the nation’s largest retailer. The recently opened store covers an expansive 9,000 sq. ft. and is located at Infiniti Mall, Oshiwara, Andheri West, Mumbai, as announced in the company’s press release on Monday.

Fresh Signature outlets showcase a diverse range of 17 live food stations, encompassing offerings such as fresh dairy, ethnic sweets, a zero-waste organic zone, Turkish delights, patisserie, premium dry fruits and nuts, ethnic snacks, live khakra, fudge and chikki, an ice-cream sundae parlor, noodle bar, health café, artisanal honey bar, and various other culinary delights.

The store opening was graced by the presence of pastry chef Pooja Dhingra and Bollywood actress Shilpa Shetty, as mentioned in the press release.

At present, Reliance Retail manages 141 Fresh Signature stores nationwide, with each store covering a retail area of 3,000–5,000 sq. ft. The brand provides a diverse range of everyday grocery essentials, chocolates, confectionaries, processed food, juices, beverages, home and personal care products. Additionally, it offers international cuisine ingredients and local snacks.

Continue Exploring: Reliance Retail expands Smart Bazaar stores to small towns, targets growing demand

The release mentioned that the grocery retail chain intends to broaden its presence by expanding to additional locations in the upcoming months.

Reliance Retail Ltd, a subsidiary of Reliance Retail Ventures Ltd (RRVL), serves as the holding company for all retail entities within Reliance Industries Ltd. RRL, alongside other subsidiaries and affiliates of RRVL, manages an integrated omni-channel network comprising over 18,650 stores and digital commerce platforms.

In the third quarter of the fiscal year 2023-2024, which ended in December 2023, RRVL reported a net profit of INR 3,165 crore and a revenue of INR 74,373 crore.

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