Muted Volume Growth Signals Cautious Optimism for FMCG Sector
India’s leading fast-moving consumer goods (FMCG) companies reported modest performance in the March 2024 quarter, with volume growth showing signs of strain amid lingering demand challenges in rural markets. While urban consumption continues to provide stability, the industry’s heavyweights remain guarded as recovery across key categories remains uneven.
Hindustan Unilever Ltd (HUL), the country’s largest FMCG firm, posted a 2% year-on-year volume growth in Q4 FY24 — a sequential slowdown from the 3% recorded in the December quarter. While food and home care categories maintained resilience, weakness was evident in fabric wash and the premium personal care segment, reflecting subdued discretionary spending.
Marico Ltd saw a more muted trend, reporting flat overall volume growth in the fourth quarter. The company cited persistent rural softness and a delayed summer season as factors impacting demand recovery, particularly in its core hair oils portfolio. However, segments like Saffola continued to demonstrate stable consumer traction.
Dabur India Ltd fared relatively better, achieving mid-single-digit volume growth despite a challenging macro environment. Demand in rural markets remained under pressure, but the company benefitted from a steady performance across healthcare and home care segments. Its international business, which contributes over 30% of revenue, showed healthy momentum, aiding overall topline growth.
Nestlé India clocked strong revenue growth of 9.3% year-on-year, driven largely by price-led gains and sustained demand for its key brands in the foods and beverage categories. However, volume-led growth was moderate, suggesting that market expansion rather than price hikes will be critical for future acceleration.
Analysts indicate that while inflationary pressures have eased, rural recovery — a critical growth driver for the FMCG sector — remains patchy. Soft consumer sentiment and delayed summer demand have led companies to adopt selective price hikes and rationalize product portfolios to protect margins.
Looking ahead, FMCG majors expect rural markets to show gradual improvement in the coming quarters, supported by government spending and a potentially favourable monsoon. However, any revival in discretionary segments will likely be slow, making sustained volume improvement the key metric to watch in FY25.