Mohit Malhotra, chief executive officer, Dabur India, agrees with Nielsen's assessment. "The second half will not be able to compensate for the decline seen in the first half. The fall was sharp in the June quarter. Also, growth in the September quarter was almost flat for the market. While the December quarter will be better, it cannot compensate for the decline seen earlier in the year," he said.
But Mayank Shah, senior category head at Parle Products, says that food companies
have been growing over the last six to eight months, adding that a contraction does not seem likely for the year.
"All key players in biscuits, for instance, have reported double-digit growth in the June and September quarters. Other packaged food companies have also reported strong numbers in the quarters under review, led by in-home consumption. The market for food products as well as overall FMCG is expected to be strong in the forthcoming quarters. I do not see a contraction in 2020," Shah says.
Packaged food and staples constitute 57 per cent of the overall FMCG market, according to Nielsen.
Personal care makes up 22 per cent. Home care comprises 14 per cent of the market.
The chief executive officer of a top food company who declined to be quoted said he would take the contraction forecast by Nielsen for the year with a pinch of salt. "I am not sure whether this is accurate because we are seeing growth on the ground. The propensity to pick up trusted brands is also strong at this stage. So national players are gaining share," he said.
At the annual FMCG Summit, organised by the Confederation of Indian Industry on Wednesday, Bharat Puri, managing director, Pidilite Industries said that big brands had an advantage over smaller names owing to the premium on trust in a crisis.
"The business of FMCG is about building and sustaining trust. Those who invest in their brands will be rewarded by consumers for the work they’ve done," he said.
Sumit Malhotra, director, Bajaj Consumer Care, said that the market was reviving and calendar year 2021 would be better. "Categories such as personal care are showing signs of revival and this coupled with news
about a vaccine to be launched in the months ahead will pull up sentiment further," he said.
The government has indicated that a vaccine could be launched by the March quarter of next year, which could push up consumer sentiment, especially in urban areas. While rural sales constitute 37-38 per cent of the FMCG market, urban sales make up 62-63 per cent, implying that a revival in cities is important for the overall market.
Full-year forecast for 2020
Nielsen says market will decline by 1-3%
Third revision in a year by Nielsen
Agency says that growth in second half not enough
First half saw impact of lockdown