FMCG Sector Poised for Modest Revenue Growth in FY26: CRISIL Ratings
India’s fast-moving consumer goods (FMCG) sector is expected to witness a mild revenue recovery in FY26, with growth projected at 6-8%, according to a report by CRISIL Ratings. This follows a period of subdued performance, with the sector registering just 3-5% revenue growth in FY24 due to sluggish rural demand and price corrections in key product categories.
Rural Demand Gains Traction
The anticipated recovery in FY26 is largely attributed to a gradual revival in rural consumption. Rural markets, which account for approximately 40-45% of FMCG sales, have been weighed down by weak demand over the past two years. However, early signs of improvement suggest that rural spending is set to rebound, driven by better agricultural output and increased government spending on rural infrastructure.
Pricing Pressures Ease
One of the key factors affecting revenue growth in recent years has been price corrections, particularly in key input materials such as edible oils and dairy products. Entering FY26, these corrections are expected to stabilize, allowing for steady volume growth to contribute more significantly to overall revenue. CRISIL’s report highlights that while price-led revenue growth was strong in previous years, future gains will rely more on increased consumption.
Volume-Driven Growth Ahead
The sector is expected to return to a more balanced reliance on volume expansion rather than price hikes. Leading FMCG companies have been adjusting their strategies, focusing on product innovation and distribution expansion to drive consumption. With inflationary pressures easing and consumer sentiment showing signs of recovery, demand across both urban and rural markets is likely to improve.
Challenges Remain
Despite the optimistic growth projections, challenges persist. Competitive intensity in the FMCG space remains high, with companies vying for increased market share through aggressive pricing and promotional activities. Additionally, unpredictable monsoon patterns and macroeconomic uncertainties could impact rural spending and overall sectoral growth.
Outlook for FY26
CRISIL Ratings expects large FMCG players with strong rural distribution networks and diversified product portfolios to benefit the most from the impending recovery. While revenue growth may not return to double-digit levels in the near term,