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FMCG will perform in bad times

Net capital gains from the sector over a full cycle may be more than the gains logged by cyclical sectors

A rather intriguing hypothesis recently questioned the basis for growth in the Indian FMCG segment. FMCG is seen everywhere as one of the safest defensive sectors - it's classified as a non-cyclical perennial by many analysts. This is because people continue to buy soaps and toothpaste even in a recession. So earnings are predictable. In India, FMCG is also seen as a growth area, apart from being a defensive haven. The logic is linked to poverty reduction and GDP growth. As millions move up the income ladder from poverty, to the lower income group (LIG) and from LIG to middle income ...