Urban Demand Slows: Is the demand for FMCG and food items in urban areas being affected due to high inflation? We are saying this because the two leading FMCG companies of the country have announced the results of the second quarter of the current financial year 2024-25, there has been a decline in their profits. On Wednesday, October 23, 2024, Hindustan Unilever Limited announced the results and according to it, the company’s profit has decreased by 4 percent in the second quarter. So last week Nestle India had declared its results in which it had seen a decline of 0.94 percent in profit.
FMCG demand softens in cities
The management of these companies is also accepting the decline in demand. Hindustan Unilever Limited (HUL) CEO and MD Rohit Jawa said, in the September quarter, there has been a slowdown in FMCG demand in urban markets while demand in rural areas has increased. Gradually improvement is being seen. He said, we are keeping a close eye on the gradual improvement in consumer demand. HUL’s net profit in the second quarter was Rs 2612 crore which was Rs 2717 crore in the second quarter of the last financial year 2023-24.
Middle-class cut down on expenses
Nestle India is also facing decline in demand in urban areas. Nestle India’s quarter-on-quarter growth in the July-September quarter has been the lowest in the last eight years. The middle-class living in urban areas has cut down their expenses. Its biggest impact has been seen on the milk and chocolate segments. Nestle India Chairman and MD Suresh Narayan said, consumption of premium items remains strong but demand is decreasing in the middle segment in which most of the FMCG companies are present.
Middle-class hands tight!
Suresh Narayan said, people who have money are spending hugely. But the middle-class is feeling the pinch. He said, the companies which are targeting the middle segment and offering things at reasonable prices are facing temporary problems. Suresh Narayan said that most of the FMCG companies are facing problems because the middle segment is in some trouble. He said, earlier weak demand used to occur only in one quarter, but now the decline in demand is being seen continuously for 2-3 quarters. However, he expressed confidence that there will be improvement in demand in the long term.
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