Manufacturers of fast moving consumer goods (FMCG) anticipate a growth rate increase starting this quarter, following a five-six-quarter pause, in the majority of categories like personal care products and soaps goods, domestic pesticides, and biscuits, driven by demand in rural areas return, premiumization, and recovery of value expansion, as per industry executives.
They stated that a major source of value growth will be a rise in product prices. As businesses pass along the rising costs of raw goods like palm oil, crude oil, up to 30% sugar, wheat flour, and bulk tea. Most category growth is likely to be driven by the combination of volume and value increase. rates from the single-digit range to perhaps mid-teens during the next two quarters. growth observed during the last few quarters, they stated.
According to Rohit Jawa, CEO of Hindustan Uniliver Limited (HUL), the FMCG market has consistently expanded by around half due to price hikes and the other half due to increased volume. According to him, the price has been negative to zero up until now. However, that is becoming better, contributing to a few growth percentage points that was absent from the marketplace. In 2023–2024, FMCG businesses cut their pricing as The cost of inputs decreased. Therefore, I predict that (price growth) will return gradually. We’ve For the past five-six quarters, I have been missing that. We delighted in the moments when there Jawa informed analysts that inflation is a component that is absent from the growth equation. last month. HUL has announced a planned price rise and has begun to implement calibrated price increases. low single-digit price growth in the upcoming quarter. Godrej Consumer Goods According to CEO Sudhir Sitapati, from this quarter, there will be a “notable price increase.”
Price will be a major factor. Last week, he informed analysts that overall growth will be “bordering on the teens.” driven by price rise in the second part of this fiscal year, even though the volume Growth is “even significantly lower” or stays constant. The business grew by 6–8%. across the majority of product categories.
FMCG companies have struggled with growth pace for the previous few quarters as a result of increasing inflation in everyday necessities like food. Although urban markets accounted for a major portion of revenues in the previous fiscal year, Compared to urban markets, firms reported more growth in rural markets during two or three quarters ago. Between July and September, the majority of businesses said that urban growth had slowed slightly as demand in rural areas recovered. Kirana or general trade The harshest effects of organized commerce on large-city businesses were caused by fast.
In the third and fourth quarters of this fiscal year, the recovery of rural demand, a favorable monsoon, and price increases would boost FMCG growth rates, according to Mayank Shah, vice president of Parle Products, a biscuit manufacturer, said, “The cost The first and second quarters of last year saw industrial decreases. fiscal whose foundational impact has vanished. A price increase of 7-8% is imminent, which will enhance the increase of value. Premium is important. Premiumization will help growth, according to corporations like HUL. are changing their range of products to increase the value of consumption. Besides, Analysts reported volume growth for numerous FMCG companies. According to a Colgate-Palmolive saw 8% year-over-year volume growth in the September quarter, compared to 7% for Godrej, according to the most recent Nuvama Institutional Equities report.
8% for Pidilite Industries, 15% for Bikaji, 5% for United Breweries, and 5% for consumers and Adani Wilmar at 13%. This was the case even as businesses like Tata Consumer, United Spirits, Nestle, Dabur, and HUL reported lower rise in volume. According to the research, the urban slowdown will last for two years quarters, while the recovery in rural areas will continue to be sluggish.
