Sameer Shukla, executive director, Nielsen India, said that under the GST regime regional players that failed to comply with new tax norms may have been weeded out. “Many new firms, meanwhile, have joined the pool. This may have lifted the average growth rate since weaker players that dragged down the average rate of growth, are no more on the list,” he said.
Two years back, Alwar-based Jayanti Group, maker of jal jeera- and lemon-flavoured aerated drinks, had challenged the hegemony of Coca-Cola and PepsiCo sufficiently for the global giants to rethink their strategy. Coca-Cola had revamped its almost-forgotten drink Rimzim; PepsiCo had revamped its snacks portfolio, with 20-odd regional variants and backed them with a strong marketing campaign.
Soon after the GST roll-out, however, analysts predicted that a formalisation of the FMGC sector would follow and small companies
would find it difficult to maintain high growth.
However, that has not happened. On the contrary, they have taken a lead over the sector leaders. Cumulative growth of some 50,000 local manufacturers is 75 per cent higher than the top 50 players such as Hindustan Unilever, ITC, Nestle, Dabur and Godrej in September. The top 50 have grown only 10.6 per cent in the July-September period, while the next 50 grew at 10.4 per cent. The next 200 grew 12.8 per cent in the same period. Those trailing the list have grown at 18.7 per cent.
The Nielsen data also shows a clear distinction between national and regional firms. The gap between their growth rates, according to moving annual total (MAT), was 16 percentage points. MAT measures sales figures over the course of the previous 12 months.
A number of factors are at work here, claim experts.
According to Rajat Wahi, partner, Deloitte India, weeding out of wholesalers because of the GST was a blessing in disguise for the small players. “In regions where big players were dependent on wholesalers, sales have suffered. Smaller players, however, have filled in the gaps,” he added.