A little under three weeks ago, Britannia MD Varun Berry made headlines for pointing out that consumers were thinking twice before buying a 5 rupees pack of biscuits, let alone cars, real estate or stocks. A week after that, Parle set off alarm bells by saying it might have to consider letting go of up to 10,000 people due to slowing economic growth. Last week, Finance Minister Nirmala Sitharaman announced a slew of measures to address the slowdown, and at least when it comes to the sentiments of business leaders, the measures seem to have had a positive impact.
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Speaking to CNBC-TV18’s Manisha Gupta at a panel at FICCI Foodworld 2019, Berry opined that the slowdown was temporary and that normalization would take 6 months to kick in. He said that Britannia had identified the slowdown as far back as Diwali last year and had tightened its belt in anticipation, but had not cut down on any market-facing expenditure. Berry explained the reason for the 6-month timeline as well – the impact of the government’s new announcements would trickle down to consumers, and the base effect would kick in.
Amul’s RS Sodhi was quick to agree, emphasizing that Amul was seeing a double-digit growth in each of its segments, and an average growth of 25% across segments. He said that given that food was a necessity, India was unlikely to see recession in the food sector for decades, maybe even centuries. Others on the panel including representatives from ITC, Cargill and Kellogg’s agreed with the view, saying that growth had slowed down in some product categories and some geographies, but that growth avenues were still plentiful.
The panellists also touched upon disruption to the industry caused by millennial consumption patterns. ITC’s food division head Hemant Malik said that sales through e-commerce channels and websites were a growing part of ITC’s revenues and that custom products were being launched specifically targeted at e-commerce panels. RS Sodhi expressed bewilderment at the process of advertising to millennials, saying that each millennial was like a TV channel or newspaper by themselves due to social media, but it was Varun Berry who summarized the phenomenon best when he said “this generation is flirtatious with brands, while our generation used to be married to brands.”
All in all, the mood in the room seemed to be far from the ‘doom and gloom’ narrative that FMCG majors were projecting a few weeks ago.