Procter & Gamble expects demand to recover on the back of good monsoon conditions and easing inflation

New Delhi: Procter & Gamble Hygiene and Health Care Ltd (PGHH), which sells Whisper, Vicks and Old Spice brands, said it is seeing green shoots of demand due to abundant monsoon rains and slowing inflation, but pointed to declining rural wages and rising unemployment as near-term consumer concerns.

“These are definitely green shoots that we see. Within the FMCG industry, positive trends are finally emerging in consumption, both rural and urban. Inflation has been easing steadily, with July and August closing below the RBI’s medium-term target of 4%,” Mrinalini Srinivasan, chief financial officer at PGHH, said during the company’s analyst day held virtually on Wednesday.

Green shoots are also being seen in rural markets, he said, mainly due to good monsoon rains and declining inflation. “Demand by category is growing healthily, with double-digit growth in sales and users in the category,” he added.

P&G India will focus on its “integrated growth strategy”, which includes its focus on everyday products and expanding the reach of its products.

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“The strategy includes a portfolio of everyday products, where performance drives brand choice… that is the core around which the company operates; superiority in product, packaging and communications, retail execution and value; productivity to fund superiority along with disruption of the entire value chain for a future-proof enterprise and all this enabled by an empowered, agile and accountable organization,” said Kumar Venkatasubramanian, CEO, PGHH.

India’s fast-moving consumer goods (FMCG) industry reported a sharp decline in volume growth in the June quarter, largely due to a slowdown in packaged food sales, according to data from intelligence firm NielsenIQ (NIQ).

Overall, the sector reported a 4% increase in value growth.

For the year ended June 30, 2024, PGHH sales increased 7% to ₹4,192 crore, while net profit remained stable at ₹675 crores.

Procter & Gamble, the American multinational consumer goods manufacturer, operates through multiple entities in India and sells a range of products including shampoo (Head & Shoulders), detergents (Ariel), baby care products (Pampers) and home care products (Ambi Pur).

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Its Indian business also includes two major publicly traded companies: Gillette India (men’s and women’s personal care) and Procter & Gamble Hygiene and Health Care (women’s hygiene and healthcare).

Srinivasan said monsoon rains in 75% of the districts of the country have been normal or above normal and rural demand is expected to keep pace with these positive trends.

“However, what needs to be taken into account is the decline in rural wages and the rise in unemployment, which should stabilise in the short term with the recently announced interventions by the government. Taken together, this should bode well for consumption trends,” he added.

PGHH holds half of the market share for branded feminine hygiene products in India, currently valued at ₹3.4 billion rupees. It sells sanitary pads under the Whisper brand.

“We expect double-digit growth to continue over the next three years for the category,” it said. Growth across its feminine hygiene and healthcare categories has been “balanced” over the past year. For the company (PGHH), feminine hygiene accounts for about 70% of its sales in India.

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However, categories such as feminine hygiene are still underdeveloped in a market like India, with low per capita consumption. At the same time, competition has also emerged in the feminine hygiene segment, with more brands competing, especially those selling directly to consumers.

“Nationally, these brands (small and direct-to-consumer) represent less than 10% of the market. That said, the competitive landscape has evolved and a lot of competition has entered the category. Healthy competition can always help grow the category,” he added.

Last year, PGHH achieved cost savings of ₹113 crores. “Productivity is now fully integrated into our operating model and is adopted in every part of our operations. Last year, through our productivity interventions, PGHH achieved savings of over ₹113 crore,” he added.

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