The fast-moving consumer goods (FMCG) sector is expected to see a significant revenue growth of 7-9 per cent in the current fiscal according to a report by rating agency CRISIL. The growth in the sector will be driven by higher volume, revival in rural demand, and steady urban demand. The report also predicts that product realisations will grow modestly, with slight increases in key raw material prices for the food and beverages segment, while prices for personal care and home care segments will remain stable. Premiumisation and volume growth are expected to expand operating margins by 50-75 basis points to 20-21 per cent.
CRISIL’s report studied 77 FMCG companies, representing about a third of the sector’s revenue last fiscal year, and highlighted that the F&B segment accounts for nearly half the sector revenue, with Home and Personal Care segments each accounting for a quarter. Supported by better monsoon, rural consumer volume growth is expected to be at 6-7 per cent in fiscal 2025. Urban consumer volume growth is projected to remain steady at 7-8 per cent, driven by rising disposable incomes and a focus on premium products. The report also expresses optimism on the overall outlook for the sector, stating that revenue will benefit from modest realisation growth of 1-2 per cent and a focus on enhancing premium offerings.
Aditya Jhaver, Director at CRISIL Ratings, explains, “We expect volume growth of 6-7 per cent in fiscal 2025 from the rural consumers, supported by expectation of better monsoon benefitting agricultural production, and hike in minimum support price supporting farm incomes. Higher government spending on rural infrastructure, primarily through PMAY-G for affordable houses, will aid higher savings in rural India, supporting their ability to spend more.” The F&B segment is expected to grow 8-9 per cent, the PC segment 6-7 per cent, and the HC segment 8-9 per cent, according to Jhaver.
Overall, the FMCG sector is poised for growth in the current fiscal, with a focus on volume growth, premiumisation, and stable pricing in key segments. The sector is expected to benefit from the revival in rural demand, steady urban demand, and higher government spending on rural infrastructure. The report highlights the importance of enhanced premium offerings to drive revenue growth in the sector. With a positive outlook on the consumer goods industry, it is anticipated that the sector will continue to expand and thrive in the coming years.
