The India

Consumption Story
July 19, 2018 | -Shiv
Trends in India’s Growth
and Consumption
 GDP Growth & Private Consumption
Component of GDP
(% YoY) PFCE Real GDP
12

10

7.7
8
6.7
6

0
 India Consumption Basket
FY06 FY13 FY17 (rev est)
Food & Beverages (Alcoholic & Non-
Alcoholic) 36.8 31.5 30
Clothing & Footwear 6.7 6.3 6.4
Housing, Water, Electricity, Gas &
Other Fuels 13.9 16.4 14.4
Household Equipment and
Maintenance 3.4 3.2 2.9
Health 5 3.7 4.5
Transport 17.8 15.2 15
Communication 1.6 2.3 2.4
Recreation and Culture 0.1 1 0.8
Education 1.7 3.7 4.1
Restaurants and Hotels 2 2.4 2.0
Miscellaneous Good & Services 9 12.9 15.3
Others 2 4.3 2.2
Total 100 100 100
 India’s Heat Map
%yoy 2012 2013 2014 2015 2016 2017 2018

1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H Jan Feb Mar Apr May

INDUSTRY
IIP 3.2 5.0 4.1 1.8
3.3 6.3 4.2 2.5 4.6 7.4 7.0 4.6 4.9
IIP Consumer Durables 6.2 6.5 4.4 2.5
3.5 6.0 3.5 -1.8 -1.1 7.6 7.5 4.1 4.3
IIP Consumer Non Durables 3.1 2.4 3.0 5.1
3.7 4.0 7.9 8.5 11.7 10.7 7.3 12.7 7.0
IIP capital goods -2.6 -2.8 -1.5 -1.6
5.3 9.4 -0.6 -1.1 6.4 12.8 19.5 -5.7 13.0
IIP infra and construction 5.7 6.5 7.1 1.3
0.5 6.6 5.2 1.1 5.6 7.0 12.6 8.9 7.5
Bank credit (non food) 16.1 16.3 14.4 15.2 13.8 11.0 9.2
8.6 8.9 7.1 4.8 7.1 9.5 9.8 8.4 10.7
Domestic passenger car sales 10.3 -1.1 -15.7 -1.9 -3.0 6.6 8.4
11.5 -1.6 4.5 5.8 4.4 -1.2 3.7 0.4 4.9
Domestic two wheeler sales 10.6 2.4 0.4 7.5 11.4 11.9 0.6
1.6 11.6 7.1 2.7 16.6 33.4 23.8 18.3 16.9
Airline passenger traffic 5.6 -5.9 2.0 9.9 3.7 12.7 16.4
16.7 18.5 20.3 15.7 15.1 16.3 20.4 24.1 21.7
Cellular subscriber 16.2 9.3 0.4 0.9 8.2 8.7 -2.3
-0.5 9.2 7.3 20.5 22.0 9.1 10.3 13.9 11.9
Consumer credit 12.1 14.1 14.0 13.4 14.0 14.9 16.1
17.2 19.0 17.1 14.0 16.6 20.0 20.4 17.8 19.1
Visitor arrivals 10.1 11.9 4.3
5.6 8.1 11.0 18.0 14.2 8.4 10.1 13.4 4.4
-
5.8 2.0 4.2 7.3 3.1 2.4 -12.1 -5.5 2.6 13.8 13.0 11.6 4.5 -0.7 6.0 4.8
Exports 18.1
-
-0.1 -5.0 2.6 9.1 -11.6 9.1 -9.1 -13.8 -1.6 29.6 18.1 26.0 10.4 7.1 4.6 14.8
Imports 16.8
Period of comparison is 2012 till date.
 Inflation has risen, despite soft food prices
CPI (YoY %)
Headline Core (excl. food & fuel)
8 • Inflation:
7 • 5.2% in Dec 17
6.2 • 4.3 % in Mar 18
6
• 4.9% in May 18
5 4.9
4 May 18
• Core inflation > 6%.
3
• Core inflation ex-HRA = 5.3%
2 • Clothing, housing & fuel > 5%.
1
• Deflation (last four months)
0
• Pulses = (-) 13.7%
• Sugar = (-)3.5%
 Inflation Outlook
CPI: Food and
% YoY CPI: All CPI: Core
Beverages
FY15 6.0 6.6 6.3
FY16 4.9 5.1 5.5
FY17 4.5 4.5 5.2
FY18 3.6 2.2 4.7
H1 FY19 P 4.8 3.2 6.0
H2 FY19 P 4.7 3.6 5.6

P: Projection
Consumer Inflation expectations much higher
 Rural Demand improving
Rural Wages
Agri Non-Agri
12.0

10.0

8.0

6.0

• 4.0

2.0

0.0 Rural wages recording

Mar/15 Aug/15 Jan/16 Jun/16 Nov/16 Apr/17 Sep/17 Feb/18 decelerating trend
Consumer sentiment remains weak

Source: RBI
 Employment scenario remains uncertain
Unemployment Rate (%)
12

10

8 Net Addition to EPFO Payroll

(In Thousands)
6 Sep-17 579
Oct-17 372
5.3
4 Nov-17 632
Dec-17 536
2
Source: MOSPI
Jan-18 614
Feb-18 589
0
Mar-18 613
Total 3935

Source: CMIE
Total FMCG market is
339,000 crores.
This is FMCG plus Soft
Drinks plus Water
 FMCG – 302,000 crores
Soft drinks 30,000 crores
Water – 6,300 crores
 Last five years trendline-FMCG
2012 Rs Crores 2017 Rs Crores CAGR 2017/2012
1.Biscuits 20,000 1.Soft drinks 30,000 11%
2.Soft Drinks 20,000 2.Biscuits 27,000 8%
3.Refined Oil 13,000 3.Salty snacks 19,000 17%
4.Toilet Soaps 12,000 4.Refined oil 19,000 10%
5.Detergents 11,000 5.Detergent powders 15,000 9%
6.Salty snacks 10,000 6.Toilet Soaps 15,000 5%
7.Pkg Tea 9,700 7.Non refined Oil 14,000 9%
8.Non Refined Oil 8,900 8.Packaged Tea 13,000 6%
9.Skin creams 8,400 9.Skin creams 12,500 6%
10.Detergent bars 6,200 10. Toothpaste 10,500 10%
 Last five years trendline-Food and Soft drinks
2012 Rs Crores 2017 Rs Crores
1.Biscuits 20,000 1.Soft drinks 30,000
2.Soft Drinks 20,000 2.Biscuits 27,000
3.Refined Oil 13,000 3.Salty snacks 19,000
4. Salty snacks 10,000 4.Refined oil 19,000
5.Packaged tea 10,000 5.Non refined oil 14,000
6. Non refined Oil 9,000 6.Packaged tea 12,000
7.Chocolates 6,000 7.Chocolates 8,000
8.Health Beverages 5,000 8.Water 6,000
9.Iodised salt 4,000 9.Packaged Atta 5,600
10.Noodles 4,000 10.Palm Oil 5,600
 Last five years trendline-Home, Personal care
2012 Rs Crores 2017 Rs Crores CAGR 2017/2012
1.Toilet soaps 12,000 1.Detergent Powders 15,500 8.6%
2.Detergent powders 11,000 2.Toilet Soaps 15,000 4.8%
3.Skin Creams 8,000 3.Skin Creams 11,000 5.7%
4.Detergent Bars 6,000 4.Toothpaste 8,000 10%
5.Toothpaste 5,000 5.Detergent bars 8,000 5.2%
6.Hair Oils 5,000 6.Hair Oils 7,000 6,700
7.Shampoos 5,000 7.Shampoos 6,000 6.4%
8.Mosquito repellants 3,000 8.Mosquito repellants 4,000 9.8%
9.Coconut Oils 2,600 9.Sanitary napkins 3,200 16.3%
10.Deos and perfumes 2,500 10.Hair Dyes 3,200 8.5%
 Factors supportive of Consumption
Macro
Key Trends
variables
IIP Consumer Underlying demand remains healthy.
goods • IIP Consumer Durables contracted throughout FY18 but improved in the last 3-4
months
• Consumer non durables continue to remain strong posting a double-digit growth in
FY18
Vehicles sales/ • Auto sales recording strong growth, with healthy growth in 2- wheelers.
Air Passenger • Air passenger traffic recording more than 20% growth last three months.
traffic
Personal Loans Credit growth in the personal loans category is strong~20% in Apr18, while non-food
bank credit growth tripled to ~10% YoY in Apr18
Government • Rural demand: Focus of the Union Budget on the rural area along, forecast of a
policies normal monsoon, turn-around in construction activity
• Urban consumption: Increasing share of personal products
 Risks to Consumption
Macro
Key Trends
variables
Employment Uncertain unemployment situation.
Inflation Inflationary expectations remain very high at 8.7% (3 months ahead)
Consumer Consumer confidence in the pessimistic zone for 14 consecutive months due to
Confidence concerns on employment scenario and high price levels.
Summary