With the lowering of prices and the emergence of some hopeful signs for rural demand in the March quarter, FMCG volume growth turned positive once again. FMCG firms reported that the fourth quarter showed some initial signs of recovery after commodity headwinds had a negative influence on demand during the first nine months of the fiscal year.
According to Marico’s earnings presentation, which cited NielsenIQ data, the overall volume growth for the FMCG industry in the March quarter was estimated at 3.1% year over year. This comes after the volume growth for the sector had been declining for the previous five quarters. Volume growth in urban areas was estimated at 5.3% for the quarter ending in March. In contrast, rural volume growth was only 0.3% after falling over the previous three quarters of the fiscal year.
During a conference call to discuss financial results, Saugata Gupta, MD and CEO of Marico, stated that “FY23 started with escalating geopolitical tensions leading to steep inflation and interest rate hikes globally.” This resulted in rising food and retail prices in India, which had an impact on consumers’ perceptions of overall consumption. Although key commodity prices and retail inflation levels have moderated over the past six to nine months, it is likely that this has led to a slow recovery in FMCG consumption.
Industry insiders claimed that the food market led the fourth quarter’s volume rise, while the home and personal care segments remained under pressure.
The performance of the new age channels and the appearance of some green shoots in the rural markets towards the end of the quarter, signaling early signs of resurgence in demand, were the year’s bright spots, according to Mohit Malhotra, CEO of Dabur India.