This has prompted some buyers of fast-moving consumer goods to temporarily cut back on purchases during a period of price glut, which the company described as ‘rare’.
“India is probably going through the most difficult economic situation. Inflation is high. We’re probably going to get into a situation where we’ve now seen 14 consecutive months of double-digit wholesale price inflation,” Paranjpe told shareholders virtually during his annual speech on Thursday. “I don’t know when we last saw something like this. FMCG markets, which have generally been strong for a long time, are starting to see the effects of this.”
Test of the resilience of FMCG Mkt
Last month, wholesale prices rose to an all-time high compared to the new reporting benchmark, with the meter climbing to just below 16%.
Inflation is testing the resilience of the Fast Moving Consumer Goods (FMCG) market, Paranjpe told delegates at the annual general meeting of the country’s largest consumer company.
“And more recently, we’ve seen market rates moderate and near-term volume growth has actually turned negative,” he said.
According to global consumer research firm Kantar Worldpanel (formerly IMRB), consumer goods volumes declined about 1% during FY22. HUL’s performance is considered a measure of broader consumer confidence in India.
HUL expanded sales value by 11% last fiscal year, largely driven by price increases as it tried to offset energy, packaging and transportation costs that were up about 50% from last year.
“The near future is challenging, and it will require some acumen and a balancing act to ensure that growth does not stall and we are able to contain inflation,” added Paranjpe, Chief People and Transformation Officer at Unilever . first AGM as chairman of HUL.
The company said it will try to mitigate some of the effects of inflation by encouraging savings rather than passing on price increases to consumers. The company saved nearly 7% of its annual revenue after cutting costs, tightening supply chain operations, adapting production lines and phasing out its reliance on imported raw materials.
In the medium to longer term, HUL said it maintained confidence in FMCG demand and growth rates due to low per capita consumption, a large and young population, a growing middle class, rising wealth and technology adoption. .
HUL invests in technology and distribution, resulting in a 15% expansion in reach. About a fifth of the demand the company serves is now captured digitally.