According to Parle Products, the demonetisation drive has severely affected the growth momentum of the biscuits sector. So far, the overall sales have fallen by up to 1.5 percentage points. "Biscuits as a category saw growth of about 5 per cent in 2016, except in the past two months, when the sales were hit due to demonetisation.
"The momentum in consumption, which had picked up after the monsoon, was affected severely by demonetisation. The result was shaving off of about 100-150 bps from category growth," Parle Products Category Head Mayank Shah told PTI. Mr. Shah also suggested the fact that demonetisation has had a significant impact on consumer demand and rotation of capital in trade, its effects would continue till the government is able to infuse adequate currency into the system.
"We see it continuing till the government pumps back sufficient currency into the economy. Only about one-third of what has been demonetised has been replaced till date. In the meanwhile, we are effectively looking at change in spending or paying habits of consumers, but this may take time," Mr. Shah noted.
Parle Products enjoys close to 40% share of the estimated 25,000-crore biscuits market. Some of its many products include brands like Parle-G and Monaco among others. Shah further noted that rural demand will be a strong growth-driver in 2017.
"While urban consumption is growing, rural demand has been sluggish due to the late arrival of the monsoons. But since then we have seen revival in rural consumption as farmers expect a bumper harvest and therefor we see rural demand to be a strong growth-driver in 2017," he said.The note ban has yanked a whopping Rs 1.2 trillion or 10.2 per cent from the market capitalisation of consumer goods companies. Out of this, as much as Rs 99,000 crore value erosion is from FMCG stocks alone. The worst hit have been ITC and HUL, according to exchange data.
For the consumer goods sector as a whole, sales are down a whopping 40-70 per cent, according to analysts.
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