Retail Stock Levels at a 10% Higher Level Than Pre-Demonetisation Phase
The trade dynamism triggered by demonetisation and GST roll out has almost settled down. As a result, Apr-Jun 2018 quarter witnessed strong shipment growth on the back of a low base of last year. Meanwhile, retail offtake continued to be buoyant with double digit growth on the back of tailwinds viz. GST rate cuts, strengthening macro-economics, and robust monsoon projections. Also, the retail stock levels have risen and now stand at higher than pre-demonetisation level; modern trade channels are showing very high growth and rural growth has picked up as cash is back in the market.
THE MACRO ENVIRONMENT AND THE FMCG INDUSTRY
In the last quarterly overview report (released 25th May 2018) Nielsen had projected that FMCG manufacturers shipment will continue to show high growth in April-June (AMJ) quarter – on the back of a low base; consumption tailwind coming from GST rate cuts, strengthening macro-economics, and robust monsoon projections. This trend clearly got reflected in financial performance reported by listed FMCG manufacturers for AMJ quarter.
On the consumer offtake side, consumption buoyancy continued in AMJ quarter – the FMCG industry witnessed 10.9% growth in the quarter over year ago. With this, the FMCG indust ry growth stood at 11.6% in MAT June 18; nearly 70% of this is driven by consumption volume.
Amidst the industry dynamism, Nielsen has picked up key trends as follows:
1.Retail stock levels have jumped to levels higher than pre-demonetisation period
2.Modern Trade Channels have bounced back
3.Rural to Urban growth differential picks up again
4.Indian origin companies outpacing MNCs
5.Naturals trend Continues
RETAIL STOCK LEVELS HAVE JUMPED TO LEVELS HIGHER THAN PRE-DEMONETISATION PERIOD
Demonetisation woes and uncertainties around GST had created short-term stress on retail stock levels that witnessed around five per cent decline during each of the two events (refer chart below). With the passage of time, retail stock levels have bounced back and they now stand at 10% higher level from p re-demonetisation period.
For more details, download the full report (top right).