As India continues to take steps to curb the spread of the COVID-19 pandemic, there seems to be a huge shift in consumer preferences with a surge in demand for hygiene products and healthcare supplements and some of these changes will last well after the situation improves and the nationwide lockdown is lifted, say industry watchers.
“In the longer run, the COVID-19 recovery is likely to result in a more permanent shift in consumers’ attitudes and shopping behaviour, especially in urban areas, with increased usage of home and personal hygiene products and an accelerated shift to digital purchases,” said market research firm Euromonitor International.
The Union government imposed a 21-day lockdown on March 24, which has since been extended till May 3. Consumer industries have been among the hardest hit as restaurants and malls are shut and retail, except essential grocery stores and medicine shops, also shuttered.
Amid this lockdown and social distancing measures in place, more consumers are now buying groceries via e-commerce platforms and sales of hand sanitisers, soaps and home cleaning products have risen. “The COVID-19 pandemic has resulted in a slight shift in the paradigm of what we consider to be essentials; hygiene products have entered this category, whereas industries like apparel have shifted to discretionary,” said Euromonitor.
Its study points to rising demand for healthcare supplements as well, as more people look to boost their immunity. “There has been a surge in demand for immunity-positioned supplements, including Ayurvedic medicines and products, as consumers pursue different ways to combat the virus,” it said.
So, products such as Chyawanprash to multi-vitamin tablets and fish oils are likely to see a sales boost as consumer priorities shift to focus on inner wellbeing, even in the post COVID-19 world.
As such, consumer goods companies are likely to report weak growth in the fourth quarter, because even as essential goods continue to be produced and sold, logistics and labour-related issues due to the lockdown are hampering supplies.
Motilal Oswal Financial Services expects consumer goods companies’ sales to grow just 4 per cent in the January-March quarter, which will be the weakest since the April-June quarter of 2017, that is when firms reduced stocks ahead of the implementation of the Goods and Services Tax that year. Earnings before interest, taxes, depreciation and amortisation are also likely to see a slower growth at 8 per cent, it said.
“The impact of COVID-19 and consequent lockdown has been witnessed on supply chain and manufacturing of consumer companies,” said analysts Krishnan Sambamoorthy and Pooja Doshi of Motilal Oswal.
The broking firm has cut earnings per share estimates for consumer staples firms by 4 per cent to 11 per cent and for consumer discretionary firms by 15 per cent to 33 per cent. “The outlook for FY21 (year-ending March 2021) is also weak with likely GDP decline for the year, resulting in sharp EPS cuts,” the analysts said.