Fast-moving consumer goods (FMCG) companies are gearing up for growth in 2024, banking on various factors. From managing commodity inflation to the prospect of a favorable monsoon, and the enduring trend of premiumization in urban areas, companies are optimistic about the coming year.
Key Points:
1. Challenges in 2023:
– The past year faced challenges like lower-than-expected festive demand, rainfall shortfall impacting rural growth, unseasonal showers affecting beverage and ice-cream sales, and inflationary pressures impacting rural customers.
2. Anticipated Improvements:
– FMCG leaders anticipate demand to improve in the next few quarters.
– Large players are focusing on innovation and premiumization in urban areas while expanding rural distribution.
– Pricing actions have been taken to drive good volume growth in the upcoming quarters.
3. Market Performance in 2023:
– September 2023 quarter reported a 9% YoY jump in sales, led by urban markets.
– Rural markets showed signs of progress but had not fully recovered.
4. Market Dynamics:
– Kirana channel sales, constituting 80% of FMCG business, were stressed during the festive season.
– Modern trade and e-commerce made up 12-13% and 7-8%, respectively.
5. Strategies for Growth:
– Companies are enhancing direct retail reach, especially in rural areas.
– Focus on revitalizing general trade with affordable packs, innovation, and reducing store clutter.
6. Industry Views:
– Industry experts emphasize the need for focusing on both urban and rural consumers.
– Optimism about growth in 2024 with expectations of an improved economic environment and lower commodity price volatility.
7. Category-specific Growth:
– Growing categories show a strong focus on both rural and urban markets.
– Brands adapt to macro occurrences, tailoring perceptions around trends.
8. Post-Covid Insights:
– Post-Covid, hygiene-aware and snacking-intense consumer behavior has driven growth in segments like noodles, biscuits, and insecticides.
As FMCG companies navigate challenges, their strategies for innovation, pricing, and market focus will play pivotal roles in driving growth in the dynamic consumer landscape of 2024.