When FMCG giants pushed on with a cartful of troubles

economictimes.indiatimes.com:

FMCG (fast-moving consumer goods) companies have a lot going for them: rising disposable incomes, rapid pace of urbanisation, growing aspirations and lower penetration of branded products. However, despite a vast growth opportunity, the FMCG companies struggled with various challenges in 2023 and hope to have a better 2024. Weaker-than-expected festive demand, rainfall deficit that hampered rural growth, unseasonal rains that dampened sale of beverages and higher commodity prices constituted a daunting landscape for India's FMCG (fast-moving consumer goods) companies in 2023.

When inflation was at a record high, the FMCG industry had a high price-led growth in the last five-six quarters, though the volume was under stress. However, the trend has started reversing with the cooling of commodity prices.

While volume growth for the FMCG industry in urban India has been on a positive trajectory since April-June last year, rural markets have grown marginally this calendar year, according to market researcher NielsenIQ. In the September quarter, urban markets grew 10.2% year-on-year while rural grew 6.4%, it said. Before the Covid-19 pandemic, rural markets were driving overall growth, growing twice as fast as urban markets. But the demand has slowed down in the current quarter.

Overall sales of apparel and electronic products have been languishing for over a year now, while those of mass-segment electronic products have been low since the pandemic outbreak. According to researcher GfK, there was a slight pick-up in mass segment during Diwali.

Below are some of the challenges faced by the FMCG companies that attracted attention in 2023:

Downtrading

Birthed by inflation and plunging incomes, downtrading is a consumer