FMCG industry sees consumption revival

PTI New Delhi: The FMCG industry hopes for a revival in consumption growth in 2025 with some 'green shoots' already visible, after having a challenging year amid escalating input costs and a double-digit rise in food inflation, which ultimately slowed down the pace of the urban market growth in the second half of 2024. Soaring prices of commodities such as palm oil, coffee, cocoa and wheat forced FMCG players to go for a hike of 3 to 5% or resort to shrinkflation by reducing pack sizes and grammage to retain attractive price points, fearing a volume loss.

The makers also expect a shot in the arm in the upcoming annual budget, which would help the stressed middle-income group and stimulate consumption, besides a good monsoon and continued rejuvenation of the rural market. A resurgence of high food inflation once again in 2024 disrupted consumption patterns, particularly among masssegment consumers, said Emami Vice Chairman & MD Harsha V Agarwal, adding elevated food inflation continues to pose a significant challenge. "Consumption among the lower-middle and middle-class segments has remained subdued, with approximately 75% of average retail spending directed towards food and grocery, leaving only 25% for discretionary purchases," he said. Agarwal, who is also the President of industry body FICCI, said 'positive signs' are emerging on the consumption front as food inflation has begun to ease.

"A revival in consumption growth looks promising, supported by a good crop and increased government spending on large-scale infrastructure projects and rural schemes in the December quarter," he said. Dabur India CEO Mohit Malhotra also said that rising food inflation and a squeeze in urban demand were the key concerns during 2024."While rural demand has been growing quarter on quarter, we expect a recovery in urban demand as the new year progresses.