FMCG Volume Growth Flat in Q4 as Urban Demand Remains Tepid: Nomura
India’s fast-moving consumer goods (FMCG) sector recorded flat volume growth in the March quarter (Q4 FY24), with urban demand continuing to underperform while rural markets showed signs of a modest recovery, according to a recent report by Nomura.
Despite a sequential improvement in volume growth, the quarter failed to deliver a significant turnaround, with market momentum tempered by soft urban consumption trends and a tapering of the earlier rural revival. Analysts noted that the slowdown in rural recovery, after a strong pickup in the December quarter, was partly due to an unfavorable base from last year.
Urban markets, which had been showing signs of improvement in previous quarters, witnessed moderation — especially in discretionary categories. Nomura pointed out that while rural volumes were largely stable, the lack of a strong push from urban segments weighed down overall sector growth. Revenue trends reflected subdued performance across key FMCG categories, particularly among home and personal care brands.
In terms of pricing, analysts observed minimal gains, indicating that there was limited contribution from price hikes during the quarter. This suggests that manufacturers were cautious in passing on costs, possibly due to subdued consumer sentiment and competitive pressures.
Among individual players, Marico stood out with a sequential improvement in demand trends, though overall volumes remained mixed. Conversely, Dabur and Hindustan Unilever reported continued headwinds, largely attributed to weakness in discretionary portfolios and muted growth in premium categories.
Nomura expects overall FMCG demand to remain range-bound in the near term. The report anticipates a gradual and uneven recovery, supported by indicators like improving consumer sentiment, easing inflation, and prospects of a better monsoon, which could aid rural consumption in the latter half of the year.
FMCG companies are likely to remain watchful, balancing cautious optimism with pragmatic execution. With pricing levers limited, volume-led growth and market share gains will be pivotal for performance in upcoming quarters.