Consumer companies on recovery path in FY25

Chief executives and CXOs of 10 top global and Indian consumer-facing companies, including Coca-Cola, Reliance Retail, Apple, Shoppers Stop, Pernod Ricard, Carlsberg and Dabur, said demand has strengthened since March, bolstering quarterly sales, and forecasting a robust year ahead amid grim economic commentary for several global markets.

The optimism for FY25 is a reversal from their earlier stance when most companies struggled with faltering demand and a slowdown over the past four-five quarters as inflation curtailed spending by the middle class and rural consumers.

Beverage giant Coca-Cola chief executive James Quincey told analysts that the India business was a "little softer" in January and February, but "March and April have now bounced back." He said the company expects to have a "strong year this year" in India. Brands in its portfolio such as Thums Up had done well, he said.

In the grocery retailing business, sales in the weeks before Holi (March end) exceeded that in the same period to Diwali (November 12), Reliance Retail chief financial officer Dinesh Taluja told analysts last month. "Diwali is the biggest consumption period in the country. But for the first time, we saw that the sale during the pre-Holi period was very strong in a few markets," Taluja said.

Monsoon Boost
Department store chain Shoppers Stop said on its quarterly earnings call this week that sales staged a recovery in March, growing 13.5%, compared with 6% in February and little change in January from the year before.

"March was very, very good," said chief executive Kavindra Mishra. "April also, the first 15 days have been outstanding." He, however, cautioned that the elections and extreme summer may have a temporary impact on demand.

The apparel business is showing signs of a turnaround after a long time.

Apple, Carlsberg, AO Smith, Pernod Ricard and others reported high single-digit or double-digit expansion in the March quarter in India, outstripping overall business growth.

Apple posted March quarter revenue records in India with the business growing at "strong double digits," CEO Tim Cook said on Friday.

Pernod Ricard management said there had been an "acceleration of momentum" in India in the last quarter that will continue in the April-June period as well.

"So, growth is strong, broad-based and accelerating with the consumer demand for spirit, with continued and sustainable trends towards premiumisation and an overall strong performance for our strategic international brands, like Jameson, Absolut and our Indian whiskeys," said Helene de Tissot, executive vice president of finance and IT.

To be sure, most companies have forecast a demand revival in India given the above-normal monsoon forecast, boosting agriculture income. This will be aided by higher spending that's expected to be made by the new government in rural areas. India's general elections are currently underway in phases until June 1 with votes being counted on June 4. The southwest monsoon runs from June to September.

Growth forecast
Several global agencies have forecast robust growth in India's gross domestic product (GDP) in FY25. The Asian Development Bank has revised its estimate from 6.7% to 7%. The International Monetary Fund too has raised India's GDP growth projection by 30 basis points to 6.8%, while the Reserve Bank of India forecast 7% growth in its monetary policy review. That will maintain India's status as the fastest-growing major economy.