FMCG industry expects boost in consumer demand amid improving macros- Republic World

Supermarket | Image:Unsplash

Industry leaders in the fast-moving consumer goods (FMCG) sector are optimistic about a resurgence in consumer demand, driven by improving macro-indicators and positive expectations surrounding the upcoming monsoon and rabi crops.

Despite a sluggish performance in the March quarter due to subdued operating conditions, leading FMCG companies expect mid-to-high-single-digit growth in both value and volume for the January-March period. This growth is expected to be supported by continued expansion in gross margins, aided by deflation in input costs.

Rural demand, which has been lacklustre in recent quarters, has shown signs of revival in the January-March period, with FMCG companies noting a narrowing gap between rural and urban markets. Rural India, contributing significantly to FMCG sales, is expected to play a pivotal role in driving overall demand.

FMCG giants like Dabur, Marico, and Godrej Consumer Products are set for margin expansion, enabling increased investments in advertising and promotional activities for their brands. Marico, for instance, anticipates strong gross margin expansion and low double-digit operating profit growth.

While the operating environment in India remains subdued, companies like Godrej Consumer Products report robust underlying volume growth in their organic business. Despite challenges such as extended winter in certain regions, FMCG companies remain optimistic about future growth prospects, particularly with a positive outlook for the upcoming crop harvest and normal monsoon forecast.

International business segments are also expected to contribute to overall growth, with companies like Marico, Godrej Consumer Products, and Dabur foreseeing double-digit growth on a constant currency basis. However, currency fluctuations may impact revenue in certain regions, such as Dabur’s operations in Turkey and Egypt.

Looking ahead, FMCG companies maintain their commitment to sustainable and profitable growth, leveraging investments in branding, distribution expansion, manufacturing capabilities, and organizational development.

(With PTI inputs)