From a rise in rural demand to increased volumes and favourable commodity prices, the FMCG industry in the country is optimistic about various factors contributing to a double-digit growth led by volume in the upcoming year, following a challenging 2023.
Less robust festive demand, a shortfall in rainfall affecting rural growth, untimely rains impacting beverage sales, and elevated commodity prices have collectively brewed a challenging market scenario this year, despite the increasing visibility of “green shoots” of recovery.
The industry, with significant growth potential, particularly in an emerging market like India, foresees 2024 as a “promising year.” Favorable input prices are expected to benefit both the Home and Personal Care (HPC) and specific food business segments.
“We expect the demand situation to improve as we enter the next financial year. We expect FMCG players to increase the pace of innovation and premiumisation and also focus on significant investment behind expanding the quality of rural distribution,” Marico MD and CEO Saugata Gupta said.
FMCG companies are anticipating an expansion of their profit margins due to a decrease in commodity inflation. This is expected to lead to increased spending on branding, the revival of promotional schemes for consumers, and a higher dividend payout to shareholders, as suggested by analysts.
Many FMCG firms pass on the advantages of reduced key commodity prices to consumers through price reductions or by increasing product quantities. Anticipating swifter growth, especially in premium and larger pack sizes, is attributed to a more robust urban market and the influence of modern trade channels.
Furthermore, industry analysts anticipate a double-digit expansion for the sector, driven by increased volumes, market share gains, and a rise in rural penetration. The resurgence of popular price packs, which gained prominence during times of high inflation, is contributing to this growth.
