FMCG Sector Poised for 6-8% Revenue Growth in FY26: CRISIL Ratings
India’s fast-moving consumer goods (FMCG) sector is expected to register revenue growth of 6-8% in the upcoming fiscal year (FY26), according to CRISIL Ratings. The forecast comes as rural demand improves and premiumisation continues to shape market trends.
Rural Recovery and Premiumisation Drive Growth
Rural markets, which struggled due to inflationary pressures, are showing signs of revival, supported by stable agricultural output and softening input costs. CRISIL Ratings highlighted that this rural rebound will be a key growth driver, alongside urban consumption patterns that increasingly favor premium and value-added products.
Premiumisation remains a decisive trend, with consumers leaning toward higher-margin, branded goods in segments such as packaged foods, personal care, and home care. This shift helps FMCG companies maintain pricing power and profitability despite moderate volume growth.
Moderate Volume Growth Amid Competitive Pricing
The report predicts that volume growth will remain subdued at 3-5%, partly due to intense price competition and varying consumption patterns. While urban markets are witnessing sustained demand for premium products, rural areas are still recovering from the recent slowdown, influencing overall volume expansion.
Pricing strategies will play a crucial role in revenue generation. Despite relatively stable input costs, competitive pressures from both established players and emerging direct-to-consumer (D2C) brands may limit aggressive price hikes.
Stable Operating Margins Expected
Operating margins are projected to remain stable at around 20%, aided by softening raw material prices and ongoing cost efficiencies. Lower input cost volatility, particularly for key commodities like edible oils and packaging materials, will provide FMCG companies with greater control over profitability.
Market Outlook and Strategic Implications
With rural demand picking up and premiumisation driving higher value per unit, FMCG companies are likely to focus on product innovation and distribution expansion. Brands that effectively balance pricing strategies with cost efficiencies will be well-positioned to capture growth opportunities.
As the sector navigates competitive dynamics, industry leaders will need to invest in brand differentiation, localized marketing strategies, and supply chain improvements to sustain momentum in FY26.