Small and medium-sized FMCG companies rebounded after experiencing some quarterly declines. With the help of the food segment, they are growing faster in terms of value and volume compared to the large FMCG giants.
In their September quarter results, leading FMCG companies including HUL, Nestlé, Dabur and Tata Consumer Products reported weak demand in urban markets, mainly due to high food inflation.
According to industry observers, the urban market accounts for approximately 62% to 65% of FMCG sales, with the remainder coming from the rural market, which is dominated by food and small products.
In addition, the report said that in the second quarter, the sales volume of the fast moving consumer goods industry also “slightly improved” compared with the previous quarter. “Food consumption grew to 3.4% in Q3 2024 compared to 2.1% in Q2 2024,” the report states. Despite rising prices, the rise in sales growth was mainly attributed to staples such as edible oils, packaged atta and spices category.
“In the HPC (home and personal care) category, consumption growth stabilized at 6% in Q3’24, compared with 6.7% in Q2’23,” it added.
In urban and rural markets, consumer demand for HPC categories (including facial cleanser, shampoo, body lotion, shower gel, toothpaste, laundry detergent and other categories) has stabilized.
Additionally, large players in the FMCG sector continue to show stronger performance compared to SMEs and giants.
Small manufacturers have recovered from a decline in consumption over the past three quarters and are growing faster than larger companies, helped by a sharp recovery in small business food sales growth.
