Heading into the upcoming festival season, firms expect consumer sentiment to remain strong, although uneven rainfall distribution could weigh on rural demand. Many of the price cuts following GST 2.0 have been partly offset by inflation driven by higher raw material costs, particularly crude oil and its derivatives.
“GST 2.0 helped ease the pain that would have come had those price cuts not been introduced. Right now, prices are slowly moving to pre-GST 2.0 levels due to inflation,” Tarun Arora, chief executive officer at Zydus Wellness, told Business Standard.
“Consumers are buying more this year as well. The West Asia crisis has impacted inflation, but had GST 2.0 not come in, price increases would have been higher as they would have come in on the pre-GST prices,” he said.
“There is a rainfall deficit, prices are going up because of geopolitical tensions but those could hit demand eventually,” Arora said. “For now, I am cautiously optimistic, as demand is still holding up,” he added.
AWL Agri Business, formerly Adani Wilmar, expects buoyant demand this festive season and at least high single-digit growth.
“Rains in September have eased the pressure in many agricultural states, especially Gujarat,” said Angshu Mallick, executive deputy chairman at AWL Agri Business.
He said the kharif harvest would begin in October and monitoring the stocks reaching the market would be crucial in determining how rural demand pans out this festive season.
Parle Products, which owns brands such as Hide & Seek and Monaco, also anticipates strong demand this festive season. Demand for the biscuit maker is already in the high single digits, and the company expects it to move towards double-digit growth closer to the festive season.
“Last year, there was demand in the market during the festive season. There were other issues like stock availability due to the transition, but other factors like tax rebates and rate cuts aided demand,” said Mayank Shah, chief marketing officer at Parle Products.
Shah said the rabi harvest had been good, while the kharif harvest was yet to be assessed. He did not expect it to completely dent demand, although some stress could emerge in pockets.
