derives 80 per cent of its overall revenue from the jewellery division. In Q3, the company saw a nearly 11 per cent year-
on-year (YoY) growth in jewellery sales, primarily led by festive season demand. In Q4, it is the marriage season that is expected to help growth despite gold prices shooting up 9 per cent so far in the calendar year 2020.
and Jubilant FoodWorks, who are the country’s top listed food service operators, said delivery sales had been good in comparison to dine-in sales over the past few months, pointing to the overall trend of ‘ordering-out’, that remains strong in urban areas. The two players reported a stronger set of same-store sales growth numbers in Q3 and are expected to continue the trend in Q4.
According to experts, discretionary businesses like food services and jewellery continue to have a greater presence in urban areas versus rural areas, where consumption slowdown has been pronounced.
FMCG firms, on the other hand, have a greater exposure to rural markets, getting a third of their sales from these areas. In the case of Hindustan Unilever and Dabur, rural sales contribution to overall sales is 40 per cent, said sector analysts.
Nielsen data shows while urban FMCG growth has halved in the December quarter from a year ago, it is still higher than rural FMCG growth, which has fallen by over 70 per cent during the period. The trend is expected to stay for now. According to Suresh Narayanan, chairman and managing director, Nestlé India, a recovery in demand by the third quarter of FY21 is possible. “The rabi season harvest as well as the upcoming monsoon season will be the key factors,” he said. “The government has also focused its attention on rural areas with welfare measures. All of this should alleviate the stress in rural areas in a few quarters from now,” Narayanan added. Given that growth is expected to come with a lag, FMCG firms are gearing up for the tough times ahead. Mohit Malhotra, CEO, Dabur India, said, “The strategy for us would be to stay the course and to invest behind our brands. We will continue to expand our distribution footprint and enhance our competitiveness in the market.”
Sunil Kataria, chief executive officer, India and SAARC regions of Godrej Consumer, said, “We have a twofold strategy. One is that we will continue to focus on volume growth and will also look at value growth through premiumisation. We will drive the latter through innovations in our products, giving consumers a reason to shell out more money in these tough times. We are also tapping alternate trade channels in our effort to reach consumers quickly and efficiently.”