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FMCGs eye CSD canteen to boost biz

FMCGs and other consumer goods makers are gearing up for a drop in their high volume Army Canteen business, as they expect the government to impose restrictions on sales of items through this network of 3,900 stores to rein in alleged leakage and misuse. The Canteen Stores Department (CSD) is the single-largest customer of consumer goods companies in the country, and 5-7% of FMCG sales take place through its outlets. Stores run by the state-owned CSD typically sell goods at prices that are 10-40% lower than in regular retail stores to armed services personnel, both serving and retired, and their kin. There is already a limit on purchases by CSD card holders but that hasn’t stopped discounted products being bought by some in excess of their needs. “The proposal is to ration sales through CSD channels by anywhere between 20-40% on high-offtake products and the rationing will be stag will be stag gered across different cate gories,“ said a consumer goods compa ny executive, who is aware of the government’s plans.“Though the cap exists, the proposal is to increase it further.“ “This is perhaps going to shrink our CSD business,“ Dabur chief executive Sunil Duggal said in an investor call late last week. Duggal added that the decline of this business would be compensated by higher sales in the regular retailer channels.Luggage maker Samsonite said it expected a dip in sales in the short term but sales would normalise within a year. “This is because our category is a need based purchase and our brands have high loyalty. We expect our CSD customers to purchase our products at other sales locations,“ said Samsonite director Anushree Tainwala, echoing Duggal. Samsonite has about 180 executives dedicated to the CSD channel. But for the hundreds and thousands of CSD customers to impose cap.

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