FMCG firms see subdued volume growth in Q2

The FMCG industry expects a subdued low to mid-single-digit volume growth in the July-September quarter as weak macroeconomic conditions amid rising food prices and below-normal rainfall in some regions are impeding the recovery in rural demand.

Companies such as Marico, Dabur and Godrej Consumer Products Ltd (GCPL) in their quarterly updates said that though there was an improvement in consumption in the second quarter, the recovery has been gradual. Moreover, the festive season this year has entirely shifted to the third quarter, due to which offtake related to festivals is delayed and will carry forward to the next quarter, the companies said. Over their gross margins, the companies said they expect it to be better sequentially, helped by moderating inflation and easing price growths.

This also helped them to go for higher A&P (Advertisements and Promotions) spending. Updating its business performance for the September quarter, GCPL said: “In India, we witnessed weak macros and adverse weather conditions during the quarter.” The Godrej Group’s FMCG arm faced a “tough operating environment” and despite that its organic business delivered “mid-single digit volume growth”. Marico, which owns brands such as Parachute, Saffola, and Hair & Care, said demand trends in the second quarter of FY24 largely mirrored the trends observed in the preceding quarter. “Instances of rising food prices and below-normal rainfall distribution in some regions seemed to impede the anticipated recovery in rural demand,” the company said, adding, “in the given context, domestic volumes grew in low-single digits on a year-on-year basis...” It continued to witness “healthy trends” in offtakes, market share and penetration across key franchises.