Why the next 8 quarters are the toughest for Indian FMCG Industry

Recent data released by the Socio Economic Caste Census (SECC) is an eye opener or a refresher for most of us in the FMCG industry.

We are taught and trained to know our numbers inside out and for the passionate ones, in their sleep.

Here are a few headlines on the SECC report: If I go by the household data information , we are still referring to a HH population of 250 MHH.  Of this, 70%  lies in the rural India or the oft use term Bharat that we all know. That’s a 175 million households with an average family size of 5, a staggering 875 million people who live with an MHI range of Rs . 5000-12000  p.m.

Livelihood of 875m people are dependent on agriculture , available labour employment through either a govt. and or private projects for a few; and the rest are either unemployed or left with part or unstable employment.

Now let’s connect the dots …pre mature /shortage of rainfall ? farmer suicides ? reduction in NREGA outflow , little to report on govt. infrastructure projects . Where is the source of income for these 875 million people ?  Forget about increase in the monthly household income, we are talking about contraction .

Any guesses on the states ? I dislike the term but using it for ease of reference –  BIMARU , Maharashtra , Karnataka , Odisha, Telangana (tobacco belt).        Take a look at your sales volume in these states , include cost of sales , less taxes and see the contraction in margins .

Food baskets in these states (beyond Metro and Class 1 towns)  will hover around 65-70% on staples , contraction of income will lead to consumer seeking further discounts , and companies will have to dig deeper to hold onto to costs .

Further connect the dots – flat volumes , low margins , pricing power compromised, how will the stock market behave ?

Can we cut the chase on distracting issues such as intolerance, religion, foot in the mouth disease et all and focus on the real need of the hour for BHARAT.

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