INDIA- According to a report by ICICI Lombard General Insurance, the Indian FMCG market is showing remarkable resilience despite a myriad of challenges in the past few years and is predicted to experience a growth rate of between 7-9% in 2024.
The industry has struggled since the pandemic and experience successful retarded growth in the rural sector for the past few quarters.
The sector witnessed a notable increase in volume growth from the second half of 2023. According to the report, the FMCG market experienced an 8.6% volume growth in Q3 2023 with rural markets contributing an impressive 6.4% growth rate.
The report reveals the industry is successfully navigating the hurdles through favourable government initiatives and the sector’s adaptability, especially in embracing digital technologies. The Gati Shakti and Amrit Kaal Vision 2047 are some of the government initiatives that have contributed to the current growth of the FMCG sector.
ICICI Lombard General Insurance also pointed out the sector is becoming an increasingly important player for the Indian economy. The report revealed the industry’s economic footprint exceeds Rs 9.1 lakh crore (US$106.9 billion).
The resilience can also be attributed to the growth and expansion of online FMCG sales, which the report values at Rs 1.7 lakh crore (US$20.4 billion). The Direct to consumer (D2C) segment reflects the rapid digital transformation currently experienced in the FMCG market and changing consumer preferences.
The report said, “Such digitalisation trends underscored the industry’s adaptability to changing market dynamics and its proactive approach towards catering to digitally savvy consumers.”
However, the sector faces challenges such as high inflation, diminished customer confidence and high unemployment rates. Consulting firm Deloitte predicts FMCG sectors like personal care, beauty products, consumer durables and electronics may face diminished growth moving forward as more consumers become frugal with their disposable income spending.
The consulting firm reiterates there is potential in premium products in these categories.
Deloitte said via a statement, “Yet the growth in premium products has outpaced entry-level products in several sectors, including electronics and personal care. Companies will benefit from understanding the preferences of their customers for premium products and using them to drive growth.”
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