The consumer companies are expecting the rural demand in order to bounce back after the weather was predicted to be an above normal monsoon in 2016. However, not all the companies are revising their projections of sales growth.
Mayank Shah, the Marketing Head, Parle Products stated that the monsoon prediction is quite a strong indicator that will end the uncertainty that existed in terms of estimating the growth projections. The rural markets contribute to almost half of the sales of Parle Products and it is the biggest market for the consumer product companies in the country.
The India Meteorological Department forecasted that the rainfall will be 106 percent of the 50 year average between June and September this year following two seasons of deficit precipitation in India. Less rainfall hurts the farmers and it curbs the demands that arise in the rural markets where the companies achieve 40 percent to 45 percent of their offerings.
Saugata Gupta, the CEO at Marico, the maker of Saffola edible oils stated that the inflation will be under control if there are good rains and that they expect to observe a positive impact this year on the consumption in the second half.
The marketers state that consumption in the rural regions will boost the rural assistance programme of the government. It is also stated that a normal monsoon along with the efforts taken by the government can rejuvenate the rural economy and the consumer demand might be stronger in the latter half.
The consumer products companies are striving to increase their reach, especially in the rural areas in order to benefit from the improved consumer confidence. Dabur has stated accelerating its rural distribution footprint in order to cover 65,000 villages this fiscal year from the existing 50,000.
Even the consumer electronic and white goods companies are expecting that they can revive the rural demand that had subdued since Diwali last year. The low demand from the rural regions impacted the industry’s growth and it witnessed poor sales.