With rural demand rising and inflation easing, consumer goods firms are starting to recover lost ground
After grappling with sluggish urban consumption and high food inflation for most of the financial year 2025, the fast-moving consumer goods (FMCG) companies saw a rebound in the fourth quarter, returning to the growth path. Major players reported strong top-line and bottom-line gains, coupled with substantial steadiness in underlying volume growth in Q4FY25.
Despite the demand environment remaining challenging due to an increase in input costs, FMCG giants managed to keep the ship sailing. While Marico’s net profit grew eight per cent on a year-on-year (YoY) basis in Q4, AWL Agri Business (formerly Adani Wilmar) reported a 21.6 per cent gain in Q4 net profit on-year. Hindustan Unilever, another FMCG giant, managed to clock a four per cent YoY uptick in net profit. However, Dabur’s profit saw a dip of 8.3 per cent in the given period.
Healthy Top Line Growth
As the net profit of the major companies in the consumer goods space clocked a healthy uptick, the top-line growth indicated a clear sign of revival after a sluggish period observed in the earlier quarters. While HUL delivered a turnover of Rs 60,680 crore with an underlying sales growth of two per cent in FY25, the company’s underlying sales growth came in at three per cent in Q4FY25 as the sales grew to over Rs 15,000 crore in the given quarter.
On the other hand, Marico’s revenue from operations jumped 20 per cent YoY in the recently concluded quarter as it surged to Rs 2,730 crore. AWL Agri Business’ Q4FY25 revenue stood at Rs 18,230 crore, up 38 per cent YoY, with an underlying eight per cent volume growth. Despite the net profit taking a marginal hit, Dabur’s revenue from operations rose to Rs 2,830.14 crore in Q4 from Rs 2,814.64 crore in the corresponding period of the previous fiscal year (Q4FY25).
“During the quarter, consumer sentiment remained largely stable, supported by improving rural demand and mixed trends across mass and affluent urban segments. Moving to our performance in Q4, the India business continued to deliver sequential improvement in volume growth and strong top-line growth aided by pricing intervention in core franchises,” Saugata Gupta, the Managing Director (MD) and Chief Executive Officer (CEO) of Marico, highlighted during the earnings call.
Commodity Price Shifts
While AWL Agri Business reported that this quarter also saw palm oil sitting at the top, and the prices of palm remained high as compared to soya and sunflower, Dabur India’s CEO Mohit Malhotra, stated that the company increased the prices by around 3.5 per cent during the quarter to balance it out.
“As far as commodity prices go for the quarter, tea, coffee and palm oil have witnessed a high inflationary trend year-on-year, while crude oil continued to remain deflationary. Calibrated price increases taken in skin cleansing and beverages were largely offset by price reduction taken In home care,” Rohit Jawa, CEO and MD of HUL, added during the earnings call.
Quick Commerce Gaining Rapidly
While the overall contribution of quick commerce to the overall sales of the FMCG giants might still be small, the companies reported that quick commerce is a shopping mission that certainly, in the top eight cities and even beyond, has a good product-market fit. HUL reported that quick commerce is about two per cent or one-third of its ecommerce business at this point.
AWL Agri Business’ alternate channels generated over Rs 3,600 crore in revenue in FY25, led by over 100 per cent YoY growth in quick commerce volumes in Q4, reflecting the impact of focused improvements in assortment, availability, and promotional strategies.
“Between alternate channel, modern trade and ecommerce, ecommerce is growing faster. There is no doubt about it, and almost 100 per cent quarter-on-quarter growth. Annual growth will be more than 60 per cent… Margin-wise, normally, modern trade and ecommerce give us a little better margin than general trade,” stated Angshu Mallick, CEO and MD, AWL Agri Business, during the earnings call.
Brighter Prospects Going Ahead
With Dabur focusing on strengthening its competitive edge in the marketplace by investing in scaling up its rural footprint and rolling out consumer-centric innovations, it expects an improvement in its performance going ahead.
“We are seeing green shoots in the business. So, I think food inflation is kind of moderating. And we are seeing a 2 to 2.5 per cent of food inflation. Urban consumers should have more money in their hands to be now used in discretionary. So, going forward, sequential improvement is what we are seeing, but a gradual sequential improvement,” Mohit Malhotra, CEO of Dabur India, explained in the earnings call.
HUL is expecting growth trends to gradually improve as a result of its accelerated portfolio transformation actions and improving underlying macro conditions. Macro conditions will benefit from monetary stimulus, tax relief, lower food and crude oil inflation, and higher agricultural output. In this context, the company expects the first half of the financial year 2026 to be better than the second half of the financial year 2025.
With rural demand strengthening, food inflation moderating, and companies actively diversifying channels through quick commerce and ecommerce, the sector appears well-positioned to sustain its recovery. While challenges like fluctuating input costs persist, the outlook for FY26 remains optimistic.
