The FMCG sector is anticipated to experience modest growth throughout 2024 until the September quarter, as indicated by Kantar, a research and insights firm. This subdued growth is attributed to several factors, including uncertainty in the agricultural sector and elections that are predicted to have minimal impact on FMCG consumption. However, Kantar expects FMCG growth to improve gradually in the latter part of the year.
Additionally, it mentioned that the intense summer weather could potentially increase sales in categories like soft drinks, ice creams, sunscreens, and laundry products. However, it emphasized that the growth in these categories is expected to have a minimal effect on overall FMCG consumption.
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“As a result, we do see FMCG growth to be subdued, at least until Q3 of 2024. Keeping in mind the stronger first half of 2023, we may even end up seeing some stagnation in the early part of the year, with things getting progressively better,” Kantar said in its outlook for 2024
Describing the agricultural outlook for 2024 as a “mixed bag,” it further elaborated that dry weather conditions, attributed to El Niño, are anticipated to persist until the first half of the year. The El Niño phenomenon has also influenced the harvests of Kharif crops.
“As per the first estimates of Kharif crops released, almost all Kharif crops have seen lower yields due to uneven rainfall. This is likely to impact the first half of 2024. However, the Rabi sowing, though mildly disturbed, is much better with record hectarage under the wheat crop. El-Nino is also expected to wane by the middle of the year, and with the Rabi harvests close by, without any unexpected weather phenomenon, the year might yet turn good, especially in the second half,” Kantar stated in the February FMCG Pulse Report.
The research and insights firm also pointed out that despite 2024 being an election year, historical data shows no significant surge in FMCG growth rates during previous election cycles.
“In 2009, the consumption growth was 0.7 per cent; in 2014, it was static; and in 2019, it was negative,” it said. It added that it does not see General Elections significantly impacting FMCG growth rates at the national level.
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Kantar also observed a slight decrease in the average annual FMCG consumption in 2023, dropping from 117.2 kg per household in 2022 to 117.1 kg. They highlighted that among the 90 categories and subcategories they monitor, approximately half experienced a decline in consumption or remained unchanged. Shoppers appeared to be scaling back on expenses, particularly in categories like cooking oils, washing powders, basmati rice, and salt.
The research and insights firm also highlighted a sudden decline in value growth during the December quarter of 2023, attributed to price reductions implemented by key players.
“Categories where we see slower value growth, compared with volume growth in the latest quarter, are Hand wash, Body wash, Shampoos, Floor Cleaners, Cooking Oils,” Kantar added.
