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Raw material inflation hasn’t cooled off; discretionary demand picking up pace: Godrej Consumer

retail | Sept 9, 2021 6:03 PM IST

Raw material inflation hasn’t cooled off; discretionary demand picking up pace: Godrej Consumer

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Sunil Kataria, CEO - India and SAARC at Godrej Consumer Products spoke to CNBC-TV18 to discuss the outlook as discretionary demand returns. Godrej Consumer is currently near a record high.

The FMCG pack has been on a tear-off late. Godrej Consumer is one such stock, currently near a record high. Sunil Kataria, CEO - India, and SAARC at Godrej Consumer Products spoke to CNBC-TV18 to discuss the outlook as discretionary demand returns.

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On raw material headwinds and inflation Kataria said, “The input costs are still holding steady, I would say that. So there is no slowdown in terms of inflationary trends. In fact, we had expected that there may be some cooling off, which may happen, start from August, July onwards. But that trend right now is not visible. So what we expect, in fact, is that the current inflationary levels may hold for another six months or so.”
On recovery and demand, he said, “Different categories play out very differently. But I can tell you that the good news is that the demand is by and large, holding steady right now. So one thing which is happening as a pattern in terms of demand is that, while rural always was doing very well, even in the COVID wave one also, in fact, last year, the whole growth was led, usually by rural delta. One thing what has started happening this year, with the exception of May, obviously because of wave two is pretty sharp recovery in urban demand and which is, I would say led a lot by a channel like modern trade.”
“Overall, I believe the volume demand should hold through and the game would be to see how much we can recover the demand over last year's.”
“The good news is that the discretionary products have started coming back very strong. So that I think augurs very well. In fact, hopefully, with the festive season, not getting disrupted by any external factors, like a third wave, and the vaccination in full swing, we expect actually, in the coming six months, discretionary categories should really fuel further growth.”
On margins, Kataria said, “The gross margin pressures would sustain for some time, as I say, raw material prices will be there. But we are also doing price increases and again, these price increases are being done always by us in a very calibrated manner. We make choices in terms of which products can take more price increases versus the ones which cannot.”
For full management commentary, watch the video.
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