Monsoon prediction: FMCG makers expect spike in rural sales after IMD forecast

A good monsoon, as predicted by the IMD, this year augurs well for demand growth in rural markets and will drive overall sales, according to homegrown FMCG companies Dabur and Emami. FMCG companies are expecting an improvement in the sentiment and a positive impact on demand growth in rural areas.  The government's move to focus on rural infrastructure projects and decision to hike minimum support prices of crops would also help them regain the momentum in rural sales.

"Normal rains this year, as has been forecast, should lead to an improvement in consumer sentiments and demand growth in the hinterland," Dabur India Chief Financial Officer Lalit Malik told PTI. Kolkata-based FMCG maker Emami, whose half of the revenue comes from rural sales, expects high double digit growth from these markets. "With a normal monsoon on the horizon, Emami is targeting high double digit growth from Rural," said Emami President-Sales Madan Pandey.

He further said that rural economy being least sensitive to short-term economic disruptions like GST, Emami is very "confident" of this channel delivering this year. Emami is looking at rural India as the next big growth avenue and has been strategically building infra by investing in it, Pandey added. Expressing the similar view, Malik said: "The government's rural focus, particularly the decision to hike MSPs, would put more disposable income in the pockets of farmers and thereby add to the positive sentiment and drive consumerism."

Last week, the India Meteorological Department's (IMD), in its early forecast has said that 2018 would have a 'normal monsson' with rainfall likely to be 97 per cent of the long-term average.  The four-month monsoon season from June to September provides about 75 per cent of the annual rainfall to the country, where GDP is still largely driven by the agriculture sector.