Industry leaders anticipate that improving macroeconomic indicators and favorable expectations for a good monsoon and rabi crops will stimulate consumer demand for fast-moving consumer goods (FMCG) in the current fiscal year, as per companies’ quarter updates.
Despite a subdued operating environment in the March quarter, the industry foresees mid-to-high-single-digit growth in both value and volume during the January-March period. This growth is expected to be supported by an ongoing expansion of gross margins, facilitated by deflation in input costs.
Rural demand, which had been lackluster in recent quarters, showed signs of improvement from January to March, with some FMCG companies reporting a narrowing gap between rural and urban markets. Rural areas account for approximately 35 to 38 per cent of FMCG sales in India.
Furthermore, expanding margins is anticipated to enable companies to increase their advertising and promotional spending behind their brands. Leading listed FMCG firms such as Dabur, Marico, and Godrej Consumer Products expressed optimism regarding gross margin expansion and anticipated low double-digit growth in operating profit due to healthy margin expansion.
Marico observed a slight increase in volume growth in its domestic business in the March quarter, attributed to stabilizing trends across most portfolios. Both urban and rural consumption trends remained consistent with previous quarters.
Godrej Consumer Products reported strong underlying volume growth in its India organic business, despite subdued operating conditions, particularly in the North and East regions due to an extended winter.
GCPL expects high single-digit volume growth and mid-single-digit sales growth at the consolidated level, primarily driven by currency volatility.
Dabur India noted sluggish demand trends during the quarter but observed a pickup in rural growth fueled by price rollbacks in staples. The company expects consumption to improve in the coming months, supported by positive outlooks for the rabi crop harvest and normal monsoon forecasts.
Additionally, FMCG companies anticipate double-digit growth from their international businesses on a constant currency basis, though Dabur expects currency depreciation in Turkey and Egypt to impact its earnings. GCPL foresees a revenue impact of Rs 70 crore due to the reorganisation of its East Africa business.
Looking ahead, Marico maintains its commitment to delivering sustainable and profitable volume-led growth over the medium term.
Dabur expects consumption to improve in light of robust macroeconomic indicators and remains focused on investing in brand building, distribution expansion, manufacturing capabilities, and organisational development to capitalise on market opportunities.
