News

Published: Mar 06, 2023
Updated: Mar 06, 2023

FMCG and Dairy Firms Expect Strong Double-Digit Sales Growth in Summer

As the onset of early summer leads to a surge in demand for ice creams and cold beverages like cola, FMCG and dairy firms are betting on strong double-digit sales growth this season. Increased consumer mobility due to an abatement of the pandemic is expected to provide a tailwind to the summer season, particularly benefiting the out-of-home segment that suffered a slump in sales over the past two years.

Companies Prepare for Strong Demand

Companies have started building inventory and are ready with new and innovative offerings in anticipation of strong demand this season. Mother Dairy, a leading seller of milk, dairy beverage products, and ice creams, has ramped up its production, cold-chain infrastructure, and invested in asset deployment at consumer touchpoints to ensure shelf strength. The company has also launched about 15 new variants and flavors to entice consumption and expects its ice cream category to grow by about 25% in the upcoming season.

Increased Marketing Spends

Companies are increasing their marketing spends on endorsements, brand campaigns, and other initiatives to target consumers. Beverage maker PepsiCo is excited about the early onset of summer and has launched high-octane, brand summer campaigns featuring celebrities with mass appeal to strengthen the connect with consumers. Dabur India is witnessing good demand for its summer-centric products, particularly its beverages and glucose portfolio, and has started building inventory for the same.

Expected Sales Growth

Nuvama Group Executive Director, Institutional Equities Abneesh Roy expects strong double-digit sales growth in summer categories such as ice cream, cola, fruit juices, beer, and cooling hair oil. He predicts good demand in both urban and rural markets but expects urban markets to grow faster. However, Roy also cautions that last year's harsh summer season may have resulted in a high base, impacting the sales growth in comparison.

High base may impact growth in comparison to last year

The FMCG and dairy firms' bet on strong double-digit sales growth in summer is based on the expected surge in demand for ice creams and cold beverages like cola due to the onset of early summer and increased consumer mobility. The companies are ready with new and innovative offerings and have increased their marketing spends to target consumers. Market analysts predict strong sales growth in summer categories, but the high base may impact the growth in comparison to the previous year.