Wholesale trips up FMCGs, players say biz as usual soon

A month into GST and consumer product companies suffered volume t growth declines due to destocking. Even while most companies were ready to land GST well a from Day One, they had little control of such preparedness on the part of the wholesale trade. Wholesale, which contributes nearly ( 40% to FMCG sales, dragged down volumes for most companies. Volumes also took a beating as large retailt ers like Canteen Stores Department (CSD) were not ready to buy stocks.Business with CSD -which contributes up to 5-7% of sales for most FMCG companies -came to a standstill in June. CSD, said o industry experts, is still taking time to come t back to normalcy.

During the June quarter of the current fiscal, HUL's volumes remained flat, while Martico's India business witnessed a volume decline g of 9% against the backdrop of destocking by a trade in June. Marico said, “The off-take ( growth was satisfactory and we saw increased market shares across all key franchisees.“ Sections of trade, particularly wholesale and small retailers, are still unclear about the rules. A Hindustan Unilever (HUL) spokesperson said the company is restoring trade pipelines and has stepped up communications to the trade.

On the other hand, the transition to GST was more or less smooth for modern retail and a large part of general retail. Sunil Kataria, business head, India & SAARC, Godrej Consumer Products Ltd (GCPL), said: “The challenges with wholesale remain. They are still in the process of discovering how best they can settle down in the new tax regime, we expect wholesale trade to gain normalcy under GST by the middle of August.“For Mother Dairy, there has been a pick-up in segments such as edible oil and ghee where orders had slowed down considerably towards the end of June. For consumer durables, while July witnessed a dip in growth as new stocks took time to get replenished under the new taxation regime, teething troubles with respect to GST are as good as over. “We witnessed growth of 70% (30-40% for the overall consumer durables industry) in June due to the grand sale, but July sales were down by about 20%. In August, we hope to see good double-digit growth,“ said Nilesh Gupta, managing partner, Vijay Sales.