According to analysts, FMCG companies expect an increase in profit margins with moderation in commodity inflation.
New Delhi:
The country’s FMCG industry is poised for double-digit growth in the new year due to rising rural demand, rising sales and favorable commodity prices. The FMCG sector comprises of daily use items. The industry faced a challenging year in 2023. Demand for festivals during this period was lower than expected. Lack of rain affected the rural market and unseasonal rain affected the sale of beverages. Apart from this, high commodity prices also affected the market.
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Hopefully 2024 will prove to be a better year
However, industry experts said there are now signs of revival. In an emerging market like India, the sector has high growth potential and 2024 is expected to prove to be a better year. During this period, food business will benefit along with home consumption and personal consumption items due to reduction in raw material prices. According to analysts, FMCG companies expect an increase in profit margins with moderation in commodity inflation. In such a situation, spending on branding will increase and promotional plans will be withdrawn.
Demand may improve in the next financial year
Saugat Gupta, Managing Director and Chief Executive Officer (CEO), Marico, said, “We are hopeful that demand will improve as we enter the next financial year. FMCG companies will push for innovation and premium products and significant investment will be made in enhancing the quality of rural distribution.
A sign of strength in the rural market in the new year
Dabur India CEO Mohit Malhotra said consumer sentiment has improved significantly in 2023 with inflation softening. “There are signs of revival, although rural demand still lags behind urban markets,” he said. We expect rural markets to register a strong revival in the new year. We are already seeing a narrowing of the gap between rural and urban development. Dabur is focusing on urban and rural markets to accelerate growth.
The FMCG industry will continue to grow at a rate of over 10 percent
Angshuman Bhattacharya, national leader (consumer products and retail business) at leading consultancy firm EY India, said the FMCG sector will continue to grow in urban areas. He said it is expected to be more than 10 percent in the FMCG industry and more than 12 percent in urban areas.