Soap and Soft Drink Makers Worst Hit by Weather, GST Impact; Expect Recovery in December Quarter

Consumer buying slowed down in the hope of GST reforms, and unseasonal rains hit sales of FMCG companies during the September quarter. Soap-making and cold drink companies were the worst affected. But they hope that sales will pick up in the December quarter.

Major global companies, including Unilever, Reckitt, Heineken, PepsiCo, and Coca-Cola, reported challenges in September due to disruptions in trade channels. Unilever Chief Executive Officer Fernando Fernandes said, "Our performance in emerging markets is improving, especially in India. We are in a very good position here in the medium term." While the GST reform has had some impact in the short term, it's very good news for 40 percent of our portfolio, as it has reduced prices by approximately 10 percent.

British company Reckitt stated that the implementation of the new GST slabs affected net revenue growth in India. However, Dettol sales increased. Chief Financial Officer Shannon Eisenhardt said the impact of the GST phase-in was in the low to mid-single digits in the third quarter. The company has very successful businesses in China and India.

He said, "Both these businesses have been performing well for a long time. We have a huge opportunity to take the next segment of markets to that level of excellence and execution, and that is our primary focus in our emerging markets portfolio at this time." Heineken NV, owner of United Breweries Limited (UBL), said beer sales declined by 4-5 percent in the September quarter due to unusually heavy rains in some parts of the country during the monsoon.

Heinekin CFO Harold van den Broek said, "Beer sales also declined by 4-5 percent. This is primarily due to the monsoon season. We outperformed the market." Coca-Cola and PepsiCo have cited a decline in sales due to rain. PepsiCo Inc. Chairman Ramon L. Laguarta said, "Sales were affected due to weather conditions. India has been particularly affected by the weather, and there is some competitiveness in the beverage category, which will likely impact growth for a few quarters, but then we will recover strongly."

Unilever CEO Fernando Fernandez said, "Digital commerce contributes 17 percent to the British consumer goods company's revenue. Flipkart is growing at a rate of 30 percent in India, and TikTok is growing at a rate of 70 percent globally. Now, digitally native brands are operating with considerable success."