FMCG demand unchanged in Q4, urban weakness persists, shows Nomura report

The report states that it expects FMCG sales growth of 5.2 per cent due to some price increases, and volume growth is expected to remain stable

Demand for fast-moving consumer goods (FMCG) remained unchanged in the January-March quarter of 2024-25 (FY25), according to a report by brokerage firm Nomura.

 

FMCG sales are expected to grow 5.2 per cent on account of price increases and volume growth is expected to remain stable, according to the report.

 

“Rural demand continues to show improvement while weakness in urban (demand) persists. We expect overall consumer demand or volumes in the fourth quarter to remain unchanged versus the third quarter, as urban demand remains impacted due to low wage growth and high inflation seen earlier,” the report states.

 

The report added: “With the Nomura Global Economics team expecting inflation to moderate going forward, we expect urban demand to recover gradually.”

 

The brokerage firm expects some companies to call out the impact of a high base and also expects rural demand to continue to show improvement, which was impacted for three years and which is further supported by a bumper kharif crop and a potential good rabi crop which has seen an increase in acreage.

 

“Product price hikes are inching up and supporting value growth. Given the inflation seen in the agri basket and pressure on margins, we expect companies to continue to take gradual product price hikes,” the report said.

 

The report also said that it does not expect a one-time benefit from Maha Kumbh Mela for organised FMCG companies. According to data sourced from the industry, Uttar Pradesh in January saw a growth of 9 per cent while all-India growth stood at 6 per cent while in February, the state saw a growth of 5 per cent while all of India saw a growth of 1 per cent. 

THE TRENDS

 

*  No 'one-time benefit from Maha Kumbh Mela' for organised FMCG companies

 

*  In Jan & Feb, UP grew at a higher rate than the rest of India

 

*  Rural demand to continue to show improvement due to bumper kharif and rabi crops

 

*  Urban demand to grow gradually

 

*  Some companies to call out the impact of a high base