Single-use plastic ban to have minimal impact on big FMCG companies
The current ban covers items, which have a low utility and high littering potential, which are not widely used by large consumer companies and hence will have a limited impact for now.
NEW DELHI: The single-use plastic ban by the government will have a minimal impact on listed FMCG companies, according to Kotak Institutional Equities (KIE) and industry experts. However, the KIE report says a potential extension of this ban to other single-use plastic (SUP) items such as sachets/pouches/wrappers/laminated tubes in the medium-term could impact volumes or profitability of many consumer goods categories.
The government’s ban on single-use plastic, including plastic straws, has come into effect from July 1, 2022.
“The current ban covers items, which have a low utility and high littering potential, which are not widely used by large consumer companies and hence will have a limited impact for now. Among the banned items, plastic straws which are used with low value packs of juices/beverages (by companies like Dabur 2.5% sales) could see an increase in cost from Rs 0.25-0.30 to Rs 1-1.25 per unit (industry estimates) as they switch to imported paper straws,” says the report.
“We believe that the share of plastics used for these banned SUPs is not large (less than 2-3%), it said, adding that potential extension of the ban to SUP used for packaging could impact consumer companies.”
Nidhi Verma. head of IR & corporate communication at Tata Consumer Products told TNIE that at a company level, there aren’t many products which fall under the purview of the ban.
“So the only vertical which would have been impacted would have been Starbucks perhaps but Starbucks has already moved to paper packaging and other recyclable products. The other business, which is beverages, doesn’t have any straws in the products. So it doesn’t really impact us.” Bajaj Consumer Care MD Jaideep Nandi also informed TNIE that the impact of the ban on the company will be less than 1%.