Key industry leaders anticipate that improving macroeconomic indicators and favorable expectations for a good monsoon and rabi crops will boost consumer demand for FMCG products in the current fiscal year. Despite a challenging operating environment in the March quarter, consumer demand for FMCG goods has been sluggish.
The industry anticipates a growth of mid-to-high-single-digit in both value and volume during the January-March period. This growth is expected to be supported by the ongoing expansion of gross margins, facilitated by a deflation in input costs.
In the last few quarters, rural demand had been slow, but it has gained momentum from January-March. Additionally, some FMCG companies have reported a reduction in the gap compared to the urban market.
Rural India accounts for approximately 35 to 38 percent of the FMCG sales in the country.
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Additionally, increasing profit margins will enable companies to boost their advertising and promotional expenditures for their brands, as indicated by leading FMCG firms such as Dabur, Marico, and Godrej Consumer Products in their quarterly updates.
Marico stated, “We anticipate significant year-on-year growth in gross margins,” and added, “We project a low double-digit increase in operating profit driven by a robust expansion in operating margins.”
In the March quarter, Marico, the owner of well-known brands such as Saffola, Parachute, and Livon, reported a modest increase in volume growth in its domestic business compared to the previous quarter, attributed to stable trends across most of its product portfolios.
Marico reported that consumer demand for FMCG products remained steady throughout the quarter, showing a consistent pattern compared to previous quarters, with urban and rural consumption trends aligning closely.
The company anticipates that consolidated revenue will increase, with domestic revenue growth expected to surpass volume growth in the upcoming quarters.
Godrej Consumer Products stated that the operating conditions in India continue to be challenging.
The FMCG division of the Godrej group stated, “Our organic business in India maintained robust underlying volume growth in the high-single digits, with growth spread evenly across both Home Care and Personal Care segments.”
GCPL, the owner of brands such as HITS and Goodknight in Household Insecticides, reported subdued performance due to an extended winter in the North and East regions. However, its newly acquired brands, Park Avenue and KamaSutra, performed in line with seasonal trends in their respective categories.
“Consolidated at an organic level, we anticipate achieving underlying volume growth in the high single digits and sales growth in the mid-single digits, primarily driven by currency fluctuations,” stated GCPL, which derives half of its revenue from international markets.
Dabur India reported that demand trends were “slow” during the quarter.
“Rural growth improved due to price reductions in essentials, reducing the gap between the urban and rural areas,” it stated.
However, the company added that “with a positive outlook for the rabi crop harvest and a normal monsoon forecast,” it anticipates consumption to increase in the upcoming months.
Dabur, the owner of brands such as Dabur Chyawanprash, Dabur Honey, Real, and Vatika, stated that its “consolidated revenue is projected to experience mid-single digit growth in Q4 FY24.”
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Furthermore, FMCG companies such as GCP, Marico, and Dabur anticipate double-digit growth from their international operations on a constant currency basis.
However, Dabur anticipates an impact from currency depreciation in Turkey and Egypt. Meanwhile, GCPL foresees a revenue impact of INR 70 crore due to the restructuring of its East Africa business.
Regarding the outlook, Marico stated that it remains committed to achieving sustainable and profitable volume-driven growth over the medium term.
Dabur stated that the previous year presented challenges in terms of consumer demand.
“We anticipate an uptick in consumption as macro-economic indicators remain strong. Our commitment to investing in our brands, expanding distribution networks, enhancing manufacturing capabilities, and strengthening our organization will position us well to seize opportunities in the market,” it further elaborated.
