Nestle India Ltd. chairman and managing director Suresh Narayanan on Monday said that the ongoing festive season is expected to be good for consumer goods companies at large, but warned that the company is still keeping an eye on short-to-medium term consumption trends that have been a drag on sales of everything from cars to packaged food products. Addressing the media in Ludhiana on Monday, Narayanan said that overall demand sentiment is yet to improve but the recent round of corporate tax reductions will help boost earnings of corporates in India and stimulate investment cycle in the country.
“People are looking forward to the festive season. There is a bump that companies will get…for me, what needs to be watched is the short-to-medium term which is really the next six months,” Narayanan said. “I have no reason to believe that the festive season will not be a good one but this alone will not be an answer to the longer-term secular issues of consumption that seems to be foremost in the minds of industry people,” he added.
Narayanan’s commentary on overall demand comes amid a softening in growth for consumer goods makers who have been complaining of sluggish sales, especially in rural markets. In fact, in July this year, market researcher Nielsen lowered its 2019 growth forecast for FMCG sector to 9-10% from its previous forecast of 11-12%, citing macroeconomic factors such as slowing growth and the impact of a deficient monsoon that it added had led to a sharp slowdown in rural demand.