Sanjiv Mehta, chairman and managing director, HUL, had indicated earlier that the company was keen to ramp up production levels, especially of essential items. Most other
have also said their focus on essential products is higher at this point since demand for them is more.
An HUL spokesperson said, "During these challenging times, we are making all efforts to ensure we meet the consumer demand for essential products, such as hand wash, hand sanitiser, floor cleaners, and hygiene products. On Lifebuoy hand sanitiser, for instance, we've increased production significantly from pre-Covid levels. We are ramping up production while maintaining strict quality standards."
Analysts tracking HUL said the firm had increased hand sanitiser production by nearly 60 times compared with pre-Covid levels, even as migrant labour shortage plagued the company as well as the industry as a whole.
Suresh Narayanan, chairman and MD, Nestle India, which makes Maggi and other packaged foods, said the initial challenge of arranging transportation for movement of raw material and finished goods had eased, though obtaining permits and e-passes for inter-state transport remained. "We have now managed to scale up manufacturing to 70 per cent of capacity and all our eight plants are running. However, a gap with normal level of operations still remains. We are urging authorities to raise the limit to at least 75 per cent," he said.
In an investor call last week, Marico's MD & CEO Saugata Gupta said the company's capacity utilisation had improved to levels of about 75 per cent (in May) and that the firm was looking to increase direct distribution reach in rural as well as urban areas.This was aimed at making the company future-ready as firms with the ability to reach retail stores directly had a better advantage over those who depended on distributors and wholesalers in a post Covid-19 world.
"I believe that two things will happen," Gupta said. "Companies
with direct rural distribution are likely to gain since the wholesale channel in rural areas will remain challenged. This is owing to restricted movement within districts and the fear of people attached to the wholesale channel to travel to the nearest urban centre to pick up goods. Second will be the return of the kirana. People are going to prefer making quick shopping trips to the nearest retail point in the post-Covid world with social distancing in mind. So companies with direct distribution in urban areas are also going to gain,” he said.
Companies are also seeing a preference for value packs among consumers in general trade, especially in rural areas, though bulk-pack consumption in modern trade remains high. “We find that low-unit pack consumption in rural areas is fairly high right now and we are ensuring that we can meet this demand, which is coming from smaller centres,” said Mayank Shah, senior category head, Parle Products.
Narayanan, too, alluded to distribution and demand being better in smaller towns, a key reason being the presence of metros and larger cities in red zones. Analysts have also said a resurgence in demand is likely in rural areas first, before moving to urban centres, since the latter remains in semi-lockdown
mode and the migrant population in villages will ensure an offtake of daily-use items.