Food, phones set for boost as poll fever sweeps India

Biscuits, snacks, beverages and telecom companies expect a spike in sales during the forthcoming general election bolstered by large gatherings and rallies that will target about 900 million Indians in the world’s largest democracy.

Voting will be held in seven phases from April 11 to May 19 with counting on May 23. Some 8,000 contestants are expected to contest 543 seats. “This is definitely an additional opportunity for out-of-home consumption,” said B Krishna Rao, senior category head at Parle Products, the country’s largest biscuit company by volume. “We expect additional growth of 4-5% during election months.”

From increasing inventory and delivering at odd hours to offering discounts and launching campaigns urging people to vote, companies will be doing their bit to leverage poll fever. “Chai pe charcha or tea party theme will also help build platforms for discussions and debate on politics over a cup of tea,” said Parag Desai, executive director of Wagh Bakri, India's third-largest tea company. In the last general election in 2014, the overall consumer goods volume shrank 2% in the April-June quarter, the worst in a decade, amid high inflation and an economy that slumped to below 5% growth two years in a row.

According to Kantar Worldpanel, the tea segment fell 2.4% while biscuits declined 7.8% in terms of household consumption during the election months of April and May. With the fast-moving consumer goods market growing in double digits, companies expect a significantly higher uptick in demand, at least in these categories, compared with 2014. “We expect small unit size packs in particular to have a large potential for pickups during this time. Our urban and and rural channels are fully stocked and ready to service any upsurge in demand in the upcoming weeks leading to elections,” said Britannia vice president, sales, Gunjan Shah.

With elections being held in peak summer, soft drink companies are expected to step up distribution and promotional activity around rallies. Coca-Cola global CEO James Quincey told ETin an interview on Monday: “People tend to spend a little more money in the run-up to the elections, which flows into the economy, but consumption tends to be ‘disruptive’ in the week of voting.” A report by market research firm Nielsen said India’s FMCG sector is expected to grow 11-12% in 2019, a tad slower than 13.8% in 2018 because of the higher base. “Historical trends around elections in the last few years suggest that FMCG industry demonstrates stable to marginally lower growth in the election year,” said the report released in January. Bisleri International, India’s largest packaged water maker, said sales have almost flattened out seasonality spikes on a national level but election rallies present an opportunity to reach concentrated consumers. “We will step up distribution according to the requirement,” said founder Ramesh Chauhan.

CONNECTING VOTERS 

Telcos expect a sharp jump in voice and data consumption along with a 5% rise in mobile connection sales, which is likely to drive average revenue per user growth for the big three— Vodafone Idea, Airtel and Reliance Jio — in the April-June quarter.

Election season will translate into at least a 30-40% year-on-year upside in mobile data consumption in the June quarter, which is likely to primarily drive a 15% sequential rise in ARPU for telcos in the first quarter of FY20, said Sanjiv Bhasin, executive vice president, markets and corporate affairs, IIFL.

Analysts expect the increase in mobile data consumption to be in line with TV viewership in terms of screen time during the elections. That’s because people will be following poll trends not just on television but on 4G smartphones and also be active on social media, discussing these on Facebook, WhatsApp, and Twitter.

Rohan Dhamija, partner and head of India and the Middle East at Analysys Mason, also expects a definite spurt in smartphone and phone subscriptions as more people are likely to go mobile to catch the election action.

While vehicle sales dipped in the past two pre-election years, demand rose substantially during polls. “We have done an analysis of the past numbers and the conclusion is that in the last two preelection years, sales always fell. In the election years, sales always go up substantially,” Maruti chairman RC Bhargava told ET in December. Passenger vehicle sales in the domestic market fell 1% in the pre-election year in FY09 but rose 25% a year later. The same was the case in FY14 when volumes fell 6% but increased 4% in FY15.

With liquidity tightening in the wake of the IL&FS default and rise in interest costs hitting passenger vehicle sales for the seventh month this financial year in February, companies now expect the local automotive market to pick up only after the election. Federation of Automobile Dealers Association (FADA) President Ashish Kale said, “Due to tight monitoring of finances by the Election Commission, we do not see a sharp spike in SUV sales during elections anymore. Some states do depict a marginal increase.”

Source:-https://retail.economictimes.indiatimes.com/news/industry/food-phones-set-for-boost-as-poll-fever-sweeps-india/68402746