India has the highest number of points in the Asia-Pacific region for major consumer goods companies.

  • Nov. 6, 2023
India has the highest number of points in the Asia-Pacific region for major consumer goods companies.

According to the post-earnings management remarks of some of the largest global consumer goods businesses, the Indian market outperformed the rest of Asia Pacific, including China, in the most recent quarter. This includes the performance of the Chinese market.

During the period covering July to September, several of these companies, including Mondelez International, PepsiCo, Coca-Cola, Pernod Ricard, Colgate-Palmolive, Unilever, Levi Strauss & Co., Yum! Brands, Honeywell International, and AO Smith, reported robust growth in their India businesses reaching up to double digits.

The success of these multinational companies in India was also among the best in relation to all other rising markets. Apple and Coca-Cola have reported their strongest sales and volume performance in several years, and alcohol beverage companies Pernod Ricard and Budweiser Brewing Company have stated that they anticipate the India business to drive their worldwide statistics this fiscal year due to strong trends of product premiumization. Apple and Coca-Cola have both recorded their highest sales and volume performance in several years.

These companies' top executives have reported that demand in India has maintained at a very strong level.

The chairman and chief executive of the snacking giant Mondelez, Dirk Van de Put, stated that consumer demand in India during the most recent quarter was at a level that had not been seen in the country in four years.

James Quincey, chairman and chief executive officer of Coca-Cola, stated that the business is experiencing "consumer strength across Latin America, India, and in parts of Central and Southeast Asia." On the other hand, the trust of consumers in their ability to spend has not yet fully recovered in Africa and China.

The rekindled optimism of global consumer goods firms comes at a time when industry trackers across industries, such as fast-moving consumer goods, groceries, consumer electronics, and mobile phones, have been reporting better demand month-on-month in India in conjunction with inflation moderating.

According to executives in the sector, demand has grown even further in the first month of the current quarter, which was October. This improvement was driven by increased premiumization and expenditure related to holidays.

Even though China was a drag in volumetric terms, Quincey claimed that Coca-Cola generated double-digit volume and revenue growth in India, which resulted in the best value share gain over the past three years. This was the case despite the fact that China was the largest market for the company's products. "We're winning in the (Indian) marketplace by generating 2.6 billion transactions at affordable price points and driving availability across rural regions," added the executive.

During the earnings call, the management of Mondelez stated that the company's operations in India climbed by double digits during the September quarter, while the company's operations in China expanded by a high single digit. This development compares to a volume growth of 3.4% across all emerging countries combined. The officials of Colgate-Palmolive stated that their company's Asia Pacific net sales dropped by 4% during the most recent quarter, with organic sales growth falling by 1.5%. In contrast, the India business maintained its strong organic sales growth throughout the period of study.

The Governor of the Reserve Bank of India, Shaktikanta Das, recently predicted that India's Gross Domestic Product growth for the September quarter would be greater than the estimates. The income collected from the goods and services tax in India increased by 13% in October, reaching Rs 1.72 lakh crore. This is the second largest monthly collection since the levy was first implemented in July of 2017.

Companies operating on a global scale that operate in discretionary markets such as the alcohol market have reported that the trend of premiumization is continuing unabated.

According to Helene de Tissot, the chief financial officer of Pernod Ricard, the underlying performance in India is quite robust. Because of this, we are of the opinion that this will assist our objective to produce strong growth for the remainder of the year, as well as strong growth for the entire year and in India. The foundational aspects are done quite well.

There is a continuing trend toward premiumization, as well as a geographic structural tailwind...Therefore, we place a significant emphasis on this market given its enormous potential. According to Tissot, "because of this, our ambition for the year is extremely robust."

According to Budweiser Brewing Company APAC, which is one of the major beer businesses in the Asia Pacific region, the business in India experienced strong double-digit growth in premium and ultra premium portfolios during the most recent quarter, which supported strong double-digit increase in overall revenue.