FMCG sector set to achieve 7-9% revenue growth in 2024, CRISIL 

INDIA- A report by market analysis firm CRISIL Ratings has predicted India’s FMCG industry to experience a 7-9% growth in revenue in 2024 based on revived rural demand and steady growth of urban demand. 

The market analysis report predicts a 6-7% growth in sales volume among rural consumers in 2024, contributing 40% of total market revenue. The report attributes this anticipated growth to a better monsoon, which is poised to increase agricultural production. 

CRISIL Ratings also predicts that higher government spending on rural infrastructure through Pradhan Mantri Awaas Yojana-Grameen (PMAY-G) for affordable houses will help increase savings and disposable income spending in rural India. 

The firm also predicts volume growth for the urban market to remain steady at 7% in 2024, the same increment percentage as in 2023. This steady growth is supported by FMCG companies’ continued focus on premium product offerings in the home care and personal care segments and increasing disposable incomes.  

This focus on premium products is predicted to grow operating margins in the sector by 20-21% or 50-75 base points. However, the associated higher marketing and operational expenses, coupled with heightened competition, especially in the quick service retail wing, are predicted to negatively impact revenue and volume growth.  

The report suggests revenue growth will also be supported by a modest product realization growth of 1-2% primarily due to a rise in the prices of key food and beverage raw materials including wheat, sugar, milk and edible oils. 

The report said, “Product realisations are expected to grow in low single digits with marginal rise in prices of key raw materials for the food and beverages (F&B) segment. That said, key raw material prices for personal care (PC) and home care (HC) segments are seen to be stable.“ 

Rabindra Verma, CRISIL Ratings’ Associate Director, added, “The F&B segment is expected to grow 8-9 per cent this fiscal, aided by improving rural demand, while the personal care segment will grow 6-7 per cent. The home care segment, which outpaced the other two segments last fiscal, is expected to grow 8-9 per cent this fiscal, led by continued premiumisation push and steady urban demand.“ 

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