Rural consumption has been a pain point for most FMCG companies for the past two quarters of FY22. While Hindustan Unilever managed to scrape through with a 2% growth, the rest experienced a degrowth in rural consumption. Contrary to industry trends, Angshu Mallick, CEO, Adani Wilmar, says that rural consumption grew by a healthy 20%-25% for the Ahmedabad-headquartered FMCG major.

“We did see a dip in edible oil consumption between April and October as the intensity of the second wave of Covid-19 was severe and edible oil prices jumped too. We were growing in the region of 6%-7%, and it dipped to 3%-4%. However, from November onwards growth was back as the government intervened and reduced duties. Consumption has picked up,” explains Mallick. The segment which was untouched was branded staples (such as atta, besan and sugar), which he claims grew by close to 30% in the rural markets. “The prices of wheat, besan and sugar were almost the same, so there was no price increase. Moreover, Covid-19 pushed rural consumers to embrace packaged staples. The consumer didn’t want to buy loose atta or sugar, and that helped us,” Mallick further explains.

He says that most of the big boys in FMCG are in matured categories such as soaps, detergents and shampoo, where growth is saturated. Moreover, as prices shot up consumers cut down consumption. “We experienced a similar trend in edible oil, where people bought less quantity. Staples is an infant category, only 10% of staples are branded and a large number of rural consumers are wanting to shift from unbranded to branded.”

The ₹37,195 crore FMCG company is hoping to raise ₹3,600 crore from its IPO, which Mallick says would be utilised for capacity building and mergers and acquisitions. Though organic staples are gaining popularity, Mallick believes that it's difficult to build scale and more importantly sell at an affordable price. Having said that, he is open to picking up a stake in an organic food company which has a reasonably good scaling opportunity. “We will be a strategic investor, we will work with them and help them scale up.”

Apart from building capacity for products such as atta, mustard and chana dal milling, Mallick is particularly keen to scale up his value-added soya products business, which churns margins upwards of 20%. “Soya chunks contribute 25,000 tonnes per annum, and around ₹300 crore in value terms. The volume of soya value-added products will also grow as we are putting up another soya plant which will enable us to export to other countries too. Edible oil has been growing by 6-8%, but we are not expecting great volume here, but from other staples the volume growth is 25%-30% per annum.”

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