India’s consumer packaged goods (CPG) sector experienced well-balanced growth in 2023, witnessing an increase in retail sales value coupled with volume gains, according to a report by Bain & Company.
The report highlighted a global trend where 75 per cent of growth was attributed to price increases in 2023, yet India stood out as one of the few markets that achieved volume gains despite inflation.
The report, based on insights from over 120 consumer product company executives worldwide, emphasized that emerging markets, including India, present significant opportunities for volume growth in 2024.
In the report’s findings, India was cited as a notable example of balanced growth, with retail sales value advancing by almost 15 per cent since 2022.
This growth was attributed to consumers shifting from local or unbranded products to larger, international brands. In contrast, China faced challenges in both volume and pricing due to low consumer confidence.
The consumer product sector globally experienced substantial growth in 2023, with a nearly 10 per cent year-over-year (YOY) increase in retail sales value.
However, the report pointed out that a significant portion of this surge (75 per cent) was driven by price increases rather than volume gains. In the US and Europe, price increases accounted for 95 per cent of retail sales value growth.
The report cautioned that such imbalance is not sustainable, highlighting the importance of emerging markets in driving profitable, volume-driven growth for consumer packaged goods in the coming years.
Despite leading CPGs implementing over 20 per cent price hikes on average since Q3 2021, the report noted that similar growth in the cost of goods sold has tempered the impact, keeping the average EBIT margin for top CPGs near a 10-year low. Retailers, facing margin pressure, have sought to share this burden with CPGs.
