burger (symbolic image)
– Photo: ANI
Expansion
People are also having to drastically cut down their expenses on everything from cookies to fast food. Slow urban spending over the past three to four months has not only hit the earnings of the largest consumer goods companies, but has also raised questions about the structural nature of India’s long-term economic success. India’s economic growth since Corona has been largely driven by urban consumption. Now this seems to be changing. Nestle India Chairman Suresh Narayanan says that most of our consumption was in middle class families. But this class is now cutting down on expenses. Nestle’s revenue has declined for the first time since the June quarter of 2020 due to Corona. According to an index by Citibank, Indian urban consumption is declining sharply. Some of the decline, however, may be temporary, said Samiran Chakraborty, Citi’s chief India economist. Talking about listed Indian firms, inflation-adjusted wage cost growth for urban Indians has been below two per cent for all three quarters this year. This is much lower than the 10-year average of 4.4%.
Sales of Burger King, Pizza Hut and KFC also decreased.
Fast food chains like McDonald’s, Burger King, Pizza Hut and KFC have recorded a decline in store sales. People are still coming. They are choosing cheaper food. Burger King Asia CEO Rajeev Varman said their sales fell three percent in the quarter.
Food inflation had a greater impact
Inflation in the last 12 months has averaged 5 percent. Food inflation remains above 8% as prices of vegetables, grains and other essential food items rise due to weather shocks. Retail inflation reached a 14-month high of 6.2% in October.
Retail sales slowed to half
Retail sales rose nearly 15% year-on-year during the festive season, which ran from August to November, Nomura data showed. This is almost half compared to last year. Rajwanti Dahiya, 60, said, “We have not spent anything at all during this festival season. Dahiya survives on her husband’s monthly pension of Rs 30,000. She says savings are less. Life is going very difficult.
13 percent decline in FMCG index
The impact of declining earnings of FMCG companies is visible on the stock market. The Nifty FMCG index has fallen 13% in the last 45 days, while the benchmark Nifty 50 has fallen only 7.4%. Only one of the 15 companies in the FMCG index has seen sales increase in the September quarter.
Now emphasis on buying non-branded and cheap products
Consumers in big cities are now avoiding purchasing branded goods. They are looking for cheaper non-branded alternatives, from hair oil to tea. Due to this, Hindustan Unilever’s sales of food items and refreshments have fallen for the first time in 11 quarters. Hindustan Unilever Chief Executive Officer Rohit Java said, we are seeing growth slowing down in big cities.