FMCG faces a growth slowdown this quarter: Kantar

Research company Kantar predicts that the present slump in the fast-moving consumer goods (FMCG) industry will last until 2024. The managing director of Kantar’s global panel division for South Asia, K Ramakrishnan, said that although FMCG volumes have not decreased, growth has remained sluggish.

According to Ramakrishnan, “growth has slowed in Q3 and Q4 of CY23, and the trend points towards a tight Q1CY24.”
Over the next quarters, Kantar has forecasted a further drop in demand for necessities, home goods, and everyday consumables. The industry’s volume recovery, which saw a slowdown in the most recent quarter—the little slowdown seen in the September quarter intensified in Q4CY23—is expected to take longer to occur than anticipated.

The first half of 2024 is predicted to see El Nino conditions continue, and the early predictions for the kharif harvest—which were not very optimistic—will have some impact on FMCG. According to data provided by the company, total volumes increased by 5.2% in the December quarter, compared to 6.9% in the September quarter. This is mostly due to a significant slowdown in the business’s food division, where growth slowed to 5.8% from a robust 8.2% in Q3CY23. Volumes increased 6.1% annually in 2023, with the performance from April to September taking the lead.

India’s urban population continued to increase faster than its rural population in 2023; in Q3CY23, urban growth was 8% while rural growth was 5.8%. But both decreased from the rise of the previous quarter, with urban growth being more so. Ramakrishnan said, “While urban areas carried the majority of the growth in 2023, rural areas have covered up quite a bit of the gap, so the trends should ideally be in favor of rural leading 2024 growth.” Compared to a year ago, sales volumes increased 4.8% in rural markets and 5.6% in urban areas during the most recent quarter.

In addition, rural regions will benefit somewhat from a successful rabi season, if favorable weather patterns continue. The company has made it clear that growth in both sectors would be modest. A reduced base will be felt in the second half of 2023, which should improve performance in H2CY24.