As double-digit Q1FY27 growth projections signal resilience, FMCG companies are now banking on the monsoon, festive demand and softer input costs to drive the next leg of growth.
Despite volatile commodity prices, geopolitical uncertainty and cautious consumer spending, the fast-moving consumer goods (FMCG) sector delivered a resilient performance in the first quarter, with many leading companies projecting double-digit revenue growth and others reporting high-single-digit expansion. Demand remained stable, supported by a gradual rural recovery, resilient urban consumption, premiumisation and the continued surge in quick commerce.
Heading into Q2, companies are pinning their hopes on a normal monsoon, festive demand and easing input costs to sustain growth, even as they remain watchful of inflationary pressures and competitive intensity. Quick commerce, ecommerce and modern trade emerged as strong growth channels, while companies relied on calibrated pricing, tighter cost controls and supply chain efficiencies.
“Q1 presented a mixed demand environment, with urban markets remaining relatively resilient while rural demand continued its gradual recovery. Input cost pressures across categories such as edible oils, cocoa, coffee and packaging materials have kept the operating environment challenging. We continuously evaluate a combination of calibrated pricing actions, product mix optimisation and operational efficiencies rather than relying on any single lever,” Mayank Shah, Chief Marketing Officer, Parle Products, tells BW Retail World.
Double-Digit Growth Signals Healthy Start
Leading listed FMCG companies kicked off FY27 on a healthy note despite a challenging operating environment. Dabur expects double-digit consolidated revenue growth, with its India FMCG business likely to post near double-digit growth. Similarly, Marico has guided for consolidated revenue growth in the early twenties, driven by broad-based performance across its core, digital and international businesses.
Godrej Consumer Products or GCPL, too, expects high-teens consolidated revenue growth, backed by high-single-digit underlying volume growth, with its standalone business likely to deliver double-digit revenue growth. On the other hand, AWL Agri Business reported mid-single-digit volume growth, supported by 20 per cent-plus revenue growth in its food and FMCG portfolio and 17 per cent-plus underlying volume growth.
Echoing the broader trend, Parle Products’ Shah said urban demand remained resilient while rural markets continued their gradual recovery. He noted that consumers stayed value-conscious, favouring trusted brands and he expects a favourable monsoon and the festive season to support demand in the coming quarter.
Key Categories Driving Growth
The growth momentum in Q1 was largely driven by premium, convenience-led and value-added categories, even as companies continued to see distinct consumption patterns across urban and rural markets. Executives said that urban consumers were more willing to experiment with new products, while rural demand remained anchored in affordability and trusted brands.
“Consumer sentiment during Q1 has remained broadly stable, although there are distinct differences between urban and rural markets. Urban consumers continue to exhibit confidence, supported by improving convenience channels such as modern trade, ecommerce and quick commerce alongside a growing willingness to experiment with new flavours, formats and premium offerings,” says Jyotiroop Barua, Business Head, Confectionery, DS Group.
That shift was also visible in emerging food brands. “Our whole spices, premium spice blends and ready-to-cook range continued to outperform,” says Akash Agrawalla, Co-founder, Zoff Foods, attributing the growth to stronger quick commerce and ecommerce demand and consumers increasingly prioritising freshness, purity and convenience over price. He expects premium food products to continue growing faster as disposable incomes and awareness around food quality improve.
Dabur expects near-teens growth in home and personal care, driven by high-teens growth in hair oils and shampoos, while its food business continued to post high double-digit growth. Marico reported revenue growth in the twenties for value-added hair oils, supported by its mid and premium portfolio, while AWL Agri Business said its food portfolio excluding wheat and rice business grew 25 per cent, with premium offerings such as multigrain atta, olive oils and cold-pressed oils witnessing encouraging consumer response.
Input Inflation Keeps FMCG On Guard
While commodity inflation remained elevated through the quarter, most companies refrained from passing on the full impact to consumers, instead relying on sourcing efficiencies, calibrated pricing and operational improvements to protect profitability. Listed players, including Dabur, Marico and Godrej Consumer Products, said inflation in edible oils, crude-linked derivatives and packaging persisted through Q1, but easing costs towards the end of the quarter and continued cost-saving initiatives are expected to support margins going forward.
“While input cost volatility and the broader macroeconomic environment currently require close monitoring, our emphasis remains on innovation and strengthening distribution,” says Haresh Karamchandani, Managing Director and Group Chief Executive Officer, HyFun Foods.
For emerging brands, protecting product quality remained a bigger priority than protecting margins. “Commodity volatility is real and as a brand that refuses to compromise on ingredients, we feel it directly. Gross margins have improved to approximately 50 per cent through better scale, supplier relationships and a mix shift toward higher-margin products. In Q2, we expect input costs to remain elevated but manageable,” says Parul Sharma, Co-founder, Gladful.
Meanwhile, Marico expects sequential improvement in gross margins on the back of softer copra prices. Copra prices have corrected meaningfully, down about 45 per cent from its peak, although they remain above historical average, the company said. GCPL says that commodity costs had begun easing towards the close of the quarter, supporting a gradual margin recovery through the year.
Monsoon, Festive Demand To Set The Tone For Q2
While continuing to monitor the impact of El Niño, rural income trends and commodity inflation, FMCG companies expect a favourable monsoon and the festive season to drive the next leg of growth. Alongside traditional demand drivers, companies are also betting on faster execution across quick commerce, ecommerce and modern trade to capture incremental consumption.
“The normal monsoon continues to be one of the most potent demand triggers for the FMCG segment, especially in the food, beverages and healthcare segments. Competitiveness and high volatility in prices of commodities will still make it essential to plan inventory well. With good channel inventories and healthy consumer demand, the industry is expected to show improvement in volumes in the second half of the first quarter,” says Aditya Mihir, Director, Cura Ayurvedic and Unani.
The optimism is mirrored across listed companies. Marico said it remains positive on consumption trends but will closely monitor the impact of El Nino on the monsoon, while Dabur expects rural markets to continue outperforming urban India. AWL Agri Business said alternate channels, including quick commerce, ecommerce and modern trade, continued to outpace general trade during the quarter, contributing over 12 per cent of its overall business.
GCPL, meanwhile, expects strong business momentum to continue but remains watchful of weather-related volatility and its impact on agricultural output and rural demand. Barua adds that while delayed or deficient rainfall may create short-term pressure in certain rural markets, affordable FMCG categories such as confectionery have historically demonstrated greater resilience due to their low unit price points and high purchase frequency.
While companies remain cautious of weather-related disruptions, commodity volatility and competitive intensity, the consensus across the sector is that a favourable monsoon, festive demand and continued momentum in premium and alternate channels should help sustain consumption growth through the remainder of the first half.
