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Rising costs hit grocery consumption, staples and F&B worst affected.

Date: 04-05-2022
Subject: Rising costs hit grocery consumption, staples and F&B worst affected
Unit consumption of daily groceries and essentials fell marginally during the quarter ended March, over the year ago period, as consistent price hikes forced people to cut back on household spending, and the omicron wave impacted out of home consumption in January.

The number of goods bought, or volumes, fell 0.8% in the quarter, according to global consumer research firm Kantar Worldpanel (formerly IMRB). A 1.7% expansion in rural areas was offset by a slump in the cities where demand fell by 3.4%.For most companies urban areas account for nearly two-thirds of sales.

This is the third consecutive quarter of declining volumes in the overall market, which companies attribute to reduction in pack sizes, as consumers opt for lower-priced products and tighten their spending amidst a squeezing of household budgets.

"For most Indians, incomes are limited. Add to that price increases, not just in packaged FMCG, but in a gamut of things including fuel, edible oils, and grains, " Sanjiv Mehta, managing director of Hindustan Unilever, told ET on Friday.

"As a result, funds in the households meant for spending on packaged FMCG often get reduced and consumers titrate volumes by reducing the quantum of consumption or in many cases opt for low-unit price packs," he said.

Within the overall consumption basket, staples were the worst affected followed by food and beverages, whose out of home consumption was depressed in the first few weeks of the quarter due to the Omicron wave. Both staples and F&B fell 7.6% and 2.2%, respectively. Rural sales growth also tapered off but still growing ahead of urban, say experts.

"During the pandemic, consumers were stocking up, a behaviour we saw almost for an entire year. Staples had benefitted as a result of this. However, with inflation hitting, stock-up disappeared and purchases slowed in the category," said K Ramakrishnan, managing director, South Asia, Kantar Worldpanel Division. He pointed out that atta volume declined 27%, dragging the overall staples down.

Source Name:-Economic Times

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