India Adani Group has decided to exit from Adani Wilmar Limited (AWL), India’s largest edible oil company. Now Wilmar has revealed the further business strategy. The company said it will focus on growing its high-margin FMCG business. According to sources, Wilmar is looking to leverage its core business and wide distribution network by adopting a strategy similar to ITC. In the same way ITC used its strong cigarette business to expand into FMCG, AWL is set to use its core edible oil business as a base for FMCG growth.
Preparation to launch global FMCG in India
Sources aware of the matter said that after Adani Group’s exit, Wilmar may introduce more global FMCG brands in the Indian market. AWL’s FMCG business recorded 24 per cent year-on-year growth in volume terms in the December quarter. The share of food and FMCG in total sales volume increased to 20 percent. The share of this segment in total revenue increased to nine percent.
Profit of FMCG companies will decrease
There is a possibility of a decline in the profits of FMCG companies during the October-December quarter due to skyrocketing inflation, high production costs and price competitiveness. Apart from this, the operating profit of these companies may also remain quite low or stable. Many FMCG companies are expected to see low single digit revenue growth. One reason for this could be that many companies have opted to increase prices in the December quarter due to rising costs of products like copra, vegetable oil and palm oil. The price hike comes at a time when low consumption due to high food inflation has hit the urban market.
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