India’s consumer packaged goods (CPG) industry witnessed a balanced growth in 2023, as highlighted by a report from Bain & Company, a prominent global management consulting firm. The report underscores that despite inflationary pressures, the sector in India experienced gains in both retail sales value and volume.
The report, drawn from a survey of over 120 executives in consumer product companies worldwide, stated that emerging markets hold the greatest potential for volume growth in 2024
It said, emerging markets accounted for the vast majority of global volume gains.
“India was a standout example of balanced growth, with RSV (retail sales value) advancing by nearly 15 per cent since 2022, aided by consumers switching from local or unbranded products to bigger, international brands,” it said.
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Volume and pricing were both under pressure in China, amid low consumer confidence, it said.
The consumer product industry experienced substantial growth in the past year, with the industry’s global RSV increasing nearly 10 percent year over year in 2023.
“While that surge is nearly double the 10-year average growth rate, three-quarters of it is likely due to price increases rather than volume gains. In the US and Europe, price increases accounted for 95 per cent of RSV growth,” it said.
The report further said that imbalance is not sustainable, and emerging markets will be key to driving profitable, volume-driven growth for consumer packaged goods in the years ahead.
While leading CPGs have increased prices by more than 20 per cent on average since the third quarter of 2021, that has been blunted by similar growth in the cost of goods sold.
“For top CPGs, the average EBIT margin remains near a 10-year low, and retailers have been looking to share their own margin pain with CPGs,” it said.
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