It is anticipated by research firm Kantar that the current downturn in the fast-moving consumer goods (FMCG) industry will last until 2024. Although there hasn’t been a decline in the volume of FMCG, K Ramakrishnan, managing director of Kantar’s world panel division for South Asia, said growth has slowed.
The trend indicates a tight Q1CY24, according to Ramakrishnan, who noted that Q3 and Q4 of CY23 saw slowing growth.
Over the next few quarters, Kantar has forecasted a further drop in demand for necessities, home goods, and daily groceries. With a slight slowdown in the September quarter and a more noticeable slowdown in Q4CY23, this forecast prolongs the timeline for the industry’s volume recovery.
El-Nino conditions are predicted to last into the first half of 2024, and the initial, not very optimistic, projections for the kharif harvest will have some impact on FMCG. The firm’s data indicated that overall volumes increased by 5.2% in the December quarter, compared to 6.9% in the September quarter. This is mostly due to a significant slowdown in the business’s food division, where growth slowed to 5.8% from a robust 8.2% in Q3CY23. In 2023, volumes increased by 6.1% on an annual basis, with the performance from April to September taking the lead.
In Q3CY23, urban growth was 8% while rural growth was 5.8% in India, indicating that urbanization would continue to surpass ruralization in 2023. Both, but urban more so, decreased from the growth of the previous quarter. “As rural areas have filled in a significant portion of the gap left by urban areas in 2023, the trends should ideally favor rural areas leading 2024 growth,” Ramakrishnan stated. In the latest quarter, sales volumes increased 4.8% in rural markets and 5.6% in urban areas compared to the same period last year.
Furthermore, if the weather patterns remain consistent, a good rabi season will also benefit rural areas to some extent. The company has made it clear that growth in both sectors will be gradual. A smaller base will be felt in the second half of 2023; this should improve performance in H2CY24.
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