FMCG SECTOR- 2024 – ECONOMY
NEWS: Year end
review of FMCG sector in India in 2024.
Urban and
Rural Demand Trends in 2025
- Urban Recovery:
- FMCG companies are optimistic about a recovery in urban demand
by the June quarter of 2025, despite a sluggish start in the March
quarter.
- Urban regions recorded 4.5% volume growth (August-October
2024) compared to 6.9% in 2023, with value growth at 6.4%.
- Rural Demand:
- Expected to be bolstered by factors like a good monsoon, healthy
kharif and rabi crops, and increased rural incomes.
- Rural demand continues to outperform urban markets, supported by
government infrastructure spending.
Premiumisation
and Value Growth
- Premiumisation Trends:
- Companies are leveraging premium product offerings to enhance
value growth.
- Rural consumers are shifting preferences towards branded
personal care products, such as Dabur Amla Hair Oil and Gulabari Skin
Care.
Strategies
to Tap Rural Demand
- Affordable Pack Sizes:
- Companies are introducing smaller, affordable packs to cater to
rural consumers.
- Distribution Network Expansion:
- Investments in enhancing distribution footprints in rural
markets are underway to push demand growth.
Growth in
E-commerce and Quick Commerce
- Robust E-commerce Growth:
- Quick commerce platforms are expected to drive significant
growth in the next 2-3 years, with expansion into new cities.
- Brands like Coca-Cola are leveraging AI tools (e.g., Coke Buddy)
and aligning with quick commerce platforms to boost sales.
Resilience
and Challenges in 2024
- FMCG Industry Resilience:
- Overcame inflation, supply chain disruptions, and maintained
strong demand for health-focused and affordable products.
- Inflationary Pressure:
- Food inflation is expected to ease by the June quarter of 2025,
potentially addressing recent challenges.
Infrastructure
and Economic Growth Support
- Capex in Infrastructure:
- Increased government spending on infrastructure is expected to
sustain rural growth trends.
- Budget Expectations:
- Proposals for stimulating consumption are anticipated, which
could lead to sustained economic growth cycles.
Company-Specific
Strategies and Initiatives
- Dabur India:
- Focus on premiumisation and rural market expansion with
affordable pack sizes.
- Coca-Cola:
- Emphasis on Q-comm platforms, AI-powered tools, and expanding
accessibility in rural areas.
- Godrej Consumer Products Ltd:
- Cautiously optimistic about 2025, focusing on market development
and economic improvements.
- Parle Products:
- Betting on quick commerce growth and urban recovery.
- Joy Personal Care:
- Strengthening retail presence through direct distribution
network expansion.
Key Growth
Drivers for FMCG in 2025
- Rural demand supported by agriculture and
infrastructure spending.
- Urban recovery, driven by easing
inflation and premiumisation.
- E-commerce and quick commerce adoption.
Source: https://www.thehindubusinessline.com/economy/fmcg-industry-banking-on-urban-demand-recovery-premiumisation/article69054067.ece