Volume growth in India’s FMCG sector is expected to be slightly higher in 2025-26 as overall demand is reasonably steady, although a dramatic recovery might not be immediate, said Saugata Gupta, managing director and chief executive officer, Marico.
“The consumption is a tad better than what gets reported as a summation of the listed companies in some way,” Gupta said in an interview with Mint.
“Inflation is slowing down and urban consumption will improve. So overall volume growth for the sector is definitely going to be slightly higher than what it was last year. You might not get a dramatic recovery, but it will definitely be better than last year,” she said.
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India’s retail inflation rose 3.16% year-on-year in April, its slowest pace in over six years on the back of lower food prices. With consumer price index-linked inflation staying under 4% for three consecutive months, several economists expect the Reserve Bank of India’s monetary policy committee to cut rates again in June, which, in turn, would spur overall consumption and economic growth.
Food inflation eased to 1.78% in April from 2.69% in March, 3.75% in February, and 4.83% a year earlier, after having hovered at about 7% between November 2023 and June 2024.
Gupta expects a combination of good monsoon rains, the government’s focus on rural infrastructure, and minimum support prices for crops to bode well for rural demand.
“We expect rural demand to be steady. If there is a slight improvement in urban demand, which I foresee, overall volume growth for the (FMCG) sector this year will definitely be better than what it was last year,” he added.
Marico is confident of delivering double-digit revenue growth in the current fiscal year as well, helped by improving demand and distribution in rural and urban markets. The company also remains open to acquisitions that fit its adjacency criteria and address portfolio gaps, particularly in wellness, Gupta said.
Also read | FMCG’s mixed bag: Rural strength masks urban slump in latest quarter
Inflation to soften in second half
India’s fast-moving consumer goods industry reported a 11% year-on-year value growth for the March quarter (the final three months of 2024-25), driven by a 5.1% volume increase and a 5.6% price hike, according to NielsenIQ, Mint reported on 8 May.
While overall inflation is easing, high edible oil prices are keeping the basket of staples expensive, resulting in higher value growth. However, most consumer goods companies have signaled gradual improvement in urban demand going forward.
Wholesale price index-based inflation eased to a 13-month low of 0.85% in April as food and energy prices softened.
Earlier this month, Godrej Consumer Products Ltd said it is optimistic about demand packaged goods. “We are bullish about consumer demand over the next 12 months for a variety of reasons,” chief executive Sudhir Sitapati told media persons. “The El Nino effect basically took up food prices in India last year. Food price inflation has an immediate impact on FMCG consumption. Now that El Nino has reversed, food price inflation has come down in the January-March period.”
Additionally, the Union government’s decisions on lowering personal income tax and welfare schemes rolled out over the past year should start to bear fruit, he added.
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Marico, which sells edible oils, hair oils, and personal care products, faced inflationary headwinds as edible oil prices remained elevated in the second half of 2024-25.
Gupta expects inflation to persist in the first half of this fiscal year due to the base effect from the previous year’s price increases. However, he expects copra prices to start softening around the second quarter (copra is used in making coconut oil). “Price inflation component will be much lower in the second half,” he said.
In the March quarter, Marico’s revenue from operations grew 20% year-on-year to Rs2,730 crore, with underlying volume growth of 7% in the India business. Profit improved 7.8% to ₹345 crore. For 2024-25, Marico reported a 5% growth in volumes. Revenue from operations jumped 12.2% to ₹10,831 crore, reflecting the price hikes implemented by the company.
“Price hikes are mostly done. Inflation has been steadily moving down; crude oil prices are broadly stable. Obviously in the first half of the fiscal there will be inflation because of the base effect,” Gupta said. “As you know, both copra and edible oil prices started increasing significantly during the second half of the year. The first half will be inflationary, but copra will start softening sometime in quarter two.”
Also read | Demand slowdown puts FMCG’s ‘fast-moving’ tag to test
