THE SYMBIOTIC RELATION BETWEEN FMCG SECTOR AND RURAL INDIA

Britannia, one of the top FMCG players, has clocked higher growth in the rural market than urban showing signs of economic recovery in consumption growth which remains critical for the wider FMCG Industry.

Britannia Industries Limited is an Indian company dealing with a plethora of products in the food sector with main products being dairy products, breads, and cookies. The company was incorporated in the year 1892 and presently is under Nusli Wadia of the Wadia group. Considering the year 2023, according to different reports, it can be stated that revenues of 80% are made by the biscuit products. In the past month, it has achieved a growth of 128.75, in its stock price, which is 2.32%.

REASONS BEHIND THE GROWTH OF BRITANNIA IN RURAL AREA

Taking a deep delve into what the MD of Britannia has said about the positive outcome. The company continues to make positive strikes in rural by expanding its distribution footprint enhancing the product offerings to align with the regional preferences and positioning itself in the marketing in such a way as to benefit from the consumption growth in the rural areas of India. They also stated that in order to fascinate the rural Indian market, they will stay watchful about commodity price variations and the ever-changing geopolitical backdrop.

 Moving on to the cause and profitability side of the business, they ensure that their cost-cutting initiative continues to produce operational savings while contributing to a larger profit margin.
Britannia has reported that their consolidated profit in the June quarter has risen by 10.5% year on year to Rs 506 crore while revenue rose 4% year on year to Rs 4130 crore. Its operating profit margins expanded from 0.5% to 17.7% whereas the whole earnings before interest, tax, depreciation, and amortization also rows from around 9% year on year to Rs 753 crore.

Looking at the larger picture, the FMCG market has reported mixed results in the first quarter of the financial year. Hindustan Unilever reported higher earnings as product price cuts led to increased demand while Nestlé India has reported slowest growth in the past 8 years as price increases draw even old customers away. These price cuts have helped the company report better growth during the June quarter leading to a slight increase in sales. Further, due to this act, the net profit of the company is expected to rise amid a dip in raw material prices, helping the company recover from its decimal performance in the previous quarter and the net profit had fallen.

Overall, the Indian FMCG business recorded a 6.5% increase in volume terms at the national level during the first three months of 2024, the first time in five quarters. As a result it is right to say that, price is one of the most important considerations in capturing the potential rural market.