'Strong summer to bring relief to certain FMCGs'

Bengaluru: The Indian Meteorology Department (IMD’s) forecast of an above-normal heatwave indicating towards a strong summer is likely to benefit consumer summer categories such as soft drinks, beer, talcum powder, sunscreens, ice cream, and cooling hair oils, aiding Pepsico’s largest bottle manufacturer Varun Beverages and Emami, according to a note by Nuvama out on Tuesday.

Meanwhile, this will potentially have a negative impact on out-of-home (OOH) consumption and wheat crop. Also a weak performance is estimated from both Dabur and Colgate in toothpaste due to higher promotions than last year and weak urban demand. 

Dabur in its fourth quarter (Q4) business update of financial year 2025 said that it expects revenue to decline for January-March and a contraction in its operating profit margin due to inflation. 

FMCGs have been facing margin pressure and slow growth in the urban markets due to low wage growth, high inflationary pressures and rise in cost of living leading to cut down in spending. However, the segments that will gain from the strong summer will also from a drop in crude oil prices. 

Sharp price rise in palm oil, copra impacting cost of making soaps, snacks and coconut oil as well the rising tea cost will hurt the margins Tata Consumer, Godrej Consumer, Bikaji and Marico. Presently, Nuvama is penciling in the pricing growth of 2% annually for most staples companies.