The fast-moving consumer goods (FMCG) sector has experienced a notable deceleration in volume growth as inflation and persistent rains influence consumer spending patterns. Households in both urban and rural areas have reduced purchases of packaged foods and beverages, leading to nearly halved growth in daily essentials and groceries.
Recent data shows a 4.1% increase in overall FMCG market volumes for the quarter ending in September, a decrease from 7.2% growth observed last year. Urban areas recorded a 4.3% growth, while rural volumes rose by 3.9%, both significantly below last year’s rates of 8.1% and 6.3%, respectively.
Industry experts note that rural areas show signs of recovery, bolstered by a favorable monsoon season and anticipated gains from the kharif crop, yet urban growth faces challenges from rising food costs. While personal and home care products have posted steady growth of 4.1% and 2.9%, food and beverages have encountered pressure, particularly within snack categories. This segment saw 4.4% growth this quarter, down from 8.6% previously, with demand for items like noodles and salty snacks remaining steady, while biscuits showed slower performance.
Quarterly reports indicate mixed results across major FMCG players, with some brands reporting modest growth rates, reflecting the sector’s current volatility. Nonetheless, industry players remain optimistic about a potential rebound in demand during the second half of the year, viewing the current market deceleration as temporary.
Over the past decade, branded essentials have increasingly depended on rural demand, which remains closely linked to agricultural outcomes. Although rural growth is recovering, urban markets are currently under greater strain, signaling a complex outlook for the FMCG industry in the near term.