Indian FMCG Sector Poised for Stronger Revenue Growth in FY26: CRISIL
India’s fast-moving consumer goods (FMCG) industry is set for a revenue recovery of 100-200 basis points in FY26, according to a recent analysis by CRISIL Ratings. The report attributes this growth to stabilizing raw material costs, improved rural demand, and strategic pricing by FMCG players.
Rural Demand and Stable Input Costs Support Growth
Rural India, which accounts for nearly 40% of FMCG sector revenue, is expected to see an uptick in demand. This recovery follows a period of sluggish growth due to inflationary pressures and reduced consumer spending. With inflation cooling and economic conditions stabilizing, discretionary spending in rural markets is likely to improve.
Additionally, FMCG companies are benefiting from stable raw material prices after significant price volatility in recent years. Key commodities such as palm oil and crude-linked packaging materials have seen moderated price movements, easing cost pressures and enabling companies to pass on benefits to consumers.
Volume-Led Growth and Increasing Premiumization
CRISIL’s analysis indicates that growth in FY26 will primarily be volume-driven, in contrast to previous years where price hikes contributed significantly to revenue increases. This trend suggests a return to stronger consumer demand rather than mere inflation-led sales expansion.
Another key factor shaping the sector is premiumization, with consumers increasingly gravitating toward higher-value products. FMCG firms are expanding premium offerings across categories such as personal care, packaged foods, and beverages, further boosting revenue potential.
Profitability and Market Dynamics
Despite improved revenue expectations, operating profit margins are expected to remain stable at around 19-20%, as competitive pricing and advertising spends offset cost savings. While inflationary risks persist, especially from global supply chain disruptions, companies are leveraging efficiencies in distribution and digital transformation to maintain profitability.
With rural demand reviving and cost dynamics stabilizing, the Indian FMCG industry is set for a healthier growth trajectory in FY26. However, firms will need to balance pricing strategies, innovation, and market penetration to sustain long-term momentum in an increasingly competitive landscape.