PGHHCL Cautiously Optimistic on Growth Amid Shifting Consumption

New Delhi, Jun 12 (PTI) Procter & Gamble Hygiene and Health Care Ltd (PGHHCL) on Thursday said it is "cautiously optimistic" for growth as FMCG trends continue to evolve and consumption patterns are still shifting.

The rural demand is showing signs of healthy recovery while urban India, on the contrary, continues to face financial challenges, PGHHCL leadership said in an investors & analysts call led by its Managing Director and CEO of P&G India V Kumar.

"While the government has announced interventions in the budget, we expect the impact of these on urban consumption to take some time. Hence, in the near term, we anticipate some of these challenges to continue," PGHHL CFO Mrinalini Srinivasan said.

PGHHL remains confident in the dynamic and integrated nature of its strategy to navigate the difficulties, which will continue to drive sustained, balanced results, she added.

On the outlook, Srinivasan said the Indian economy continues to grow stronger among its global peers. In the past three years, the average has been estimated at about 6.5 per cent, and India will still grow well within the past 10 years.

"We continue to hold a cautiously optimistic outlook for the future. With the steady government and private investment and economic indicators of tax collections and foreign reserves, continuing to be healthy. There surely are reasons to be optimistic," she said.

However, she also added that one must keep an eye on the evolving global trade policies, which will have an impact on inflation and potentially demand.

On the consumer demand within the FMCG (fast-moving consumer goods), Srinivasan said industry trends continue to evolve.


"While the non-food inflation continues to stay below RBI's medium-term target of 4 per cent, consumption trends are still shifting. With heavier monsoons last year and rural wages picking up, rural demand is showing signs of healthy recovery. On the contrary, urban India continues to face financial challenges," she said.

PGHHCL operates in the feminine care category with the brand Whisper and the cough & cold segment with Vicks. The company is the market leader in both segments, having nearly half the market.

Srinivasan said now e-commerce and q-commerce (quick commerce) are becoming very important platforms, and PGHHCL is co-creating consumer communications and engagement with its partners to ensure consumers have the right information to make their choice.

"The category, though, has grown over 100 times in the last 30 years, yet the runway for further growth is significant. Note that the category penetration today is still less than 50 per cent. For example, in terms of value spent per consumer, we have 1/6 of the average consumption in China," she added.

PGHHCL is now facing competition from HUL's Stayfree, and some players include brands like Sofy, Niine, Pro Ease, and Paree etc. Some direct-to-consumers are also ramping up their sales.

"The competent landscape, though, has definitely evolved in the last few years, and more players have entered the category. The direct-to-consumer, unorganised and small sector has witnessed growth in niche channels, but at a national scale, they cumulatively still represent less than 10 per cent of the market, and we do believe that healthy competition can indeed help grow the category," Srinivasan said.

While in the health sector led by its brand Vicks, the company has launched many new products, and the initial feedback is positive. It has created new subcategories, and they will take some time to get established on a mass scale, she added.

According to Srinivasan, consumer needs are also evolving to become more 'heterogeneous', and PGHHCL has continued to invest in its portfolio. The company sees it as an opportunity to serve the cohorts of yet unserved and underserved consumers.

When asked about premiumisation, she said, "The combination of premium and affordable innovation is working well for our categories like feminine care, where these actions are linked to our evolving understanding of consumer need and context. At the same time, we discover newer jobs to be done, we are bringing together a portfolio that can also serve these evolving needs with targeted projects.