COVID-19: FMCG majors Amul, Godrej, ITC hike output up to 20% as anxiety buying spikes

The panic around the outbreak of COVID-19 pandemic in India has led a large segment of consumers hoarding basic food items such as milk, curd, rice, atta, oil and lentils, as well as personal care products such as soaps, handwash and sanitisers. One often gets to see empty shelves not just in neighbourhood kirana stores but also in super-markets. Even e-commerce platforms have been complaining of running out of stocks of necessities especially products such as handwash and hand sanitisers.

Consumer goods companies claim that they have stepped up manufacturing on a war-footing to meet additional demand. According to R.S. Sodhi, MD, Amul, demand for long-shelf life milk, milk powder and cheese has gone up by 20 per cent over the last two weeks. "Consumers not only are hoarding out of panic, they are also buying more milk-based products because there is an advisory against consuming eggs and meat. People are substituting it with milk-based protein," says Sodhi. Amul has increased its production by over 20 per cent in order to meet the increased demand.

Godrej Consumer, which was planning to increase its soap prices due to a 30 per cent increase in prices of raw materials has now shelved its plan of price increase and is instead going all out to increase production and cater to increased demand. According to Sunil Kataria, CEO (India & SAARC), Godrej Consumer Products, "We have ramped up production of our soaps, Godrej Protekt handwash and sanitisers in our units as well as through our vendor partner units. We are working closely with raw material and package material suppliers to facilitate uninterrupted supplies. Our teams are also working round-the-clock to ensure that adequate stocks are available across channels."

Similarly, ITC claims to have doubled production across its food and personal care business to ensure availability. "Given the challenging circumstances, we have redoubled our efforts to ensure adequate supply of all our FMCG products including Savlon handwash and soaps across all channels. We would like to assure consumers of availability of products and would like to urge them not to panic in this situation," says an ITC spokesperson. He also added that the company has redoubled its efforts to make sure that the various retail channels don't fall short of basic food items such as Aashirvaad Atta.

Will increase in production and sale of basic food and FMCG products reflect in higher revenue growth for the manufacturers? Not necessarily, say consumer goods industry experts. Most of these products, according to them, are low margin products which may ensure volume growth, but will not reflect too much in the revenue growth.

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