Investors shy away from FMCG stocks but embrace quick commerce platforms: Why?

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Subscribe to enjoy similar stories. Investors are shifting gears and giving stocks of traditional fast-moving consumer goods (FMCG) companies a miss. Instead, they seem to have taken a liking to retailers and new-age quick commerce platforms, which are redefining how consumers buy products and have become the new proxies for growth.

Hiren Ved, director and chief investment officer at Alchemy Capital Management, noted that investors are increasingly moving away from traditional FMCG stocks. “They are turning to aggregators and e-commerce platforms, particularly quick commerce, which sell both discretionary as well as non-discretionary consumer items as it provides a better proxy for growth as compared to the FMCG companies," Ved said. Apart from Zomato, one has limited choice in the listed place as far as non-discretionary e-commerce aggregators are concerned, said Deepak Jasani, head of retail research at HDFC Securities.

In the unlisted space though, Zomato’s competitors include Swiggy, Zepto and Bigbasket now. Swiggy is expected to come out with its initial public offering soon. Zomato acquired Blinkit (formerly Grofers) to fortify its position in the instant grocery delivery space, while Swiggy rolled out Instamart, which has rapidly emerged as a key revenue engine for the company.

Analysts said that Instamart, with a slower expansion pace than its competitors, is losing market share to Blinkit and Zepto. The declining interest in FMCG company shares is reflected in their returns. Shares of Dabur, Tata Consumer Products and Hindustan Unilever have delivered modest returns of 2-5% in 2024, with Nestle even slipping 6%.