THE RESURRECTION OF FMCG IN 2025

From rural markets holding steady despite slowdowns to urban demand showing early signs of recovery, the FMCG industry is positioning itself for a potential rebound in the New Year.

- NANDINI BANERJEE

The FMCG sector, a cornerstone of India’s retail landscape, has experienced a turbulent journey in 2024.

Amid inflationary pressures, rising commodity prices, and a shift in consumer behavior, growth has decelerated, leaving industry players to reassess strategies. Experts are hopeful, seeing ‘green shoots’ of recovery, with some even predicting a growth surge as early as 2025. According to Kantar’s latest FMCG Pulse Report, volume growth in the August-October 2024 period was 4.3 percent, a notable decline from 6.4 percent in the same period the previous year. But despite this dip, the sector is showing signs of revival, fueled by strategic pivots and emerging trends.

Inflation Woes

The primary culprit behind the slowdown is inflation, which continues to make its presence felt in both urban and rural markets. According to Kantar’s insights, the price of FMCG goods in urban areas jumped from Rs 133 per kg to Rs 137 per kg from May-July to August-October, reflecting an inflationary surge similar to what was seen in early 2022.

“Inflation is a major challenge, particularly for lowermiddle and middle-class consumers,” says Harsha V Agarwal, Vice Chairman and MD of Emami, and President of the FICCI industry body. “Consumption in these segments remains subdued, with 75% of their average retail spending directed towards food and grocery. This leaves only 25 percent for discretionary purchases.” But not all is lost. While volume growth has taken a hit, spending per household continues to climb. The average expenditure per household in the October quarter rose by 13 percent from the previous two years, reaching Rs 6,761. This indicates that while the pace of consumption is slower, consumer spending power hasn’t waned.

Rural Markets