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Leading kitchen staples and daily needs companies such as Adani Wilmar, Marico, ITC Ltd and LT Foods said consumers are back to buying branded packaged staples from loose items in 2023-24 as commodity prices have come down aiding this shift.
This has pushed up the volume or number of units sold growth rate of packaged staples in commodities where prices have fallen as compared to the loose market – in a reversal of trend during FY22 and FY23 when consumers had shifted to loose products due to sky high inflation.
“When edible oil prices went up, consumers moved away from branded to loose or downgraded to the lower priced brands. But the crash of prices has bought back the consumers to our fold with the popular brands now growing faster than others. This conversion is happening even in the rural markets,” said Angshu Mallick, managing director at Adani Wilmar, the country’s largest packaged edible oil manufacturer.
Adani Wilmar has recently said in its fourth quarter result update that in FY24, branded sales of edible oil grew 15% as compared to the overall segment growth of 10% year-on-year. Edible oil prices have crashed back almost to pre-Covid levels after record highs in 2022 and early 2023. The company said FY24 had lower edible oils prices, compared to the previous year, leading to lower revenue, despite the growing volumes. Adani Wilmar has said there is a 10% growth in its edible oil business volume last fiscal while value sales declined by 15%.
Marico Ltd, the country’s largest branded coconut oil manufacturer, said in its recent earnings update that the company’s leading brand Parachute Coconut Oil registered low single-digit volume growth last quarter due to continued “revival in loose to branded conversions amidst firming up of copra prices, which was along expected lines.”
Staples where prices have come down such as atta, pulses, rice and tea are seeing a similar shift from loose to branded while some categories like spices where prices continued to be high did not see any such volume movement.
As per industry executives, packaged atta grew at about 12% last fiscal while packaged rice at around 8%, as compared to little more than 1% growth rate of the loose categories in pace with the population growth.
Ashwani Arora, CEO and managing director of LT Foods, which sells Daawat range of packaged rice, said the company’s packaged basmati sales have increased by 11%-12% in FY24 as compared to FY23, surpassing the industry growth rate. He said the company expects a similar pace of growth in 2024-25.
Adani Wilmar MD said the company is seeing similar conversions also in sugar and besan where branded products are growing at 2-3 times the pace of the loose market. Even in tea, there is a similar shift with prices of tea having crashed by 10-15% year-on-year in FY24 and back to pre-Covid.
Viren Shah, managing director of Jivraj Tea, a popular brand in Maharashtra, Gujarat and Rajasthan, said branded tea segment is back on the growth curve last fiscal having grown by 5%. The growth had declined in the previous two years due to high prices. Out of the total tea production of 1380 million kg, about 1100 million kg is consumed domestically. Of this, 650-700 million kg is sold in the packaged form.
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