After experiencing sluggish volume growth over the past two years, FMCG companies are now squarely focused on achieving volume growth recovery for FY25. They’re pinning their hopes on a reduced inflationary environment, favorable monsoon forecasts, and a promising rabi crop to drive higher volume growth. Companies such as Britannia Industries, Nestle India, Dabur India, and Parle Products have stated that they are looking to bolster volume growth this fiscal year.
On Monday, during an investor call, Britannia Industries’ management articulated their aim for “double-digit volume growth in FY25” following the elections and monsoon season, according to an analyst report from Nuvama Institutional Equities.
Mayank Shah, Vice-President of Parle Products, explained, “During FY23, FMCG companies grappled with high-base effects in the post-Covid era, impacting volumes. In FY24, challenges such as unprecedented inflationary pressures, particularly driven by edible oils, and erratic monsoons resulted in sluggish volume growth. To manage this inflation, FMCG companies had to implement multiple price hikes. Now, with a more stable inflationary environment, favorable rabi crop conditions, and positive monsoon forecasts, most major FMCG companies are targeting increased volume growth.”
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He noted that companies have been prioritizing price reductions and increasing promotional efforts in an attempt to boost volumes.
“Numerous major FMCG companies, including ours, which experienced low single-digit volume growth in FY24, are targeting an average volume growth in the range of 9-12 percent,” Shah added.
Last week, Suresh Narayanan, CMD of Nestle India, stated, “Our company’s strategy has been centered around penetration. Therefore, my primary aim is to significantly increase volume growth swiftly, without lingering on value growth.” The leading packaged food company achieved a 4-5 percent volume growth in the March quarter. Narayanan mentioned the company’s anticipation of stable commodity prices for items like edible oils and wheat. Although facing considerable inflationary pressures concerning cocoa and coffee, the company is endeavoring to minimize the necessity for price hikes.
During an earnings call on Friday, Dabur India CEO Mohit Malhotra stated, “Strong volume growth is essential for our growth trajectory. We are targeting a mid to high single-digit volume growth. We anticipate that our growth for this fiscal year will primarily be driven by volume expansion.”
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