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FMCG growth down at 4.4 pc in May

Sindhu Bhattacharya

New Delhi , July 8

THE fast moving consumer goods (FMCG) sector witnessed a sharp downturn in May this year, with overall growth dropping to 4.4 per cent — the lowest since July 2004 — but analysts maintain that the sector is very much in the recovery mode.

The sector had logged 5.2 per cent growth in April. Categories that witnessed deep price cuts in the previous year, such as shampoos and detergent powder, were the ones that grew rapidly during May.

According to a research report by J.M. Morgan Stanley, the shampoo category saw about 35 per cent volume growth and 19.5 per cent value growth during the month, which is considered an all-time high. Top players in this category, Hindustan Lever Ltd (HLL), Procter & Gamble (P&G) and CavinKare maintained their value and volume market shares.

Head & Shoulders from P&G and Clinic from HLL recorded 44 per cent and 23.3 per cent growth respectively whereas Sunsilk, again from HLL, saw some de-growth.

And keeping up the growth momentum, the detergent powder category witnessed 12.1 per cent growth with Ariel and Surf growing by 34 per cent and three per cent respectively. In the lower price end of the market, HLL's Wheel recorded 27 per cent growth whereas Rin saw 20 per cent growth during May this year. Nirma grew at 12 per cent in value terms.

The hair oil segment continued to witness robust growth, with Marico's Parachute sales zooming 28 per cent; Dabur India's hair oil sales were up 3.7 per cent.

However, among the sectors that witnessed declines during May include detergent bars, toothpaste and soaps.

Detergent bar sales declined by 4.7 per cent; Rin was the only brand that gained one per cent in value terms, while brands from other players recorded negative growth.

In the case of toothpastes, volume sales dipped by 2.1 per cent even as leading players gained market share in both, value and volume terms. Cibaca from Colgate Palmolive grew by 18 per cent while Colgate grew by 0.7 per cent. HLL's Close Up recorded a negative three per cent growth whereas Pepsodent sales were flat.

After having recovered between October 2004 and March this year, volume growth in soaps slipped. Godrej's Fair Glow sales were up 25 per cent, Godrej No 1 and HLL's Lifebuoy saw 27 and 10 per cent growth respectively.

Analysts said that the overall slowdown reported in May was quite contrary to the recent optimism demonstrated by FMCG companies. "We continue to believe that the consumer sector is on a recovery path and recovery will sustain in the foreseeable future," they said.

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