IMD's forecast of above normal monsoon brings cheer to FMCG firms

Consumer companies say this is the fourth year that India's monsoon is expected to be good, as 65 per cent of the population lives in rural India and is highly dependent on the kharif crop

Fast-moving consumer goods (FMCG) companies expect demand to rise further across both rural and urban after the India Meteorological Department (IMD) forecast above-normal rainfall in the upcoming monsoon season.

 

The IMD on Tuesday said the country is likely to receive above-normal rainfall of 5 per cent more than the historical average of 87 cm.

 

Consumer companies said this is the fourth year that India’s monsoon is expected to be good as 65 per cent of the population is in rural India and they are highly dependent on the kharif crop.

 

The forecast only adds to the boost in consumption that is expected following the government’s announcement of no income tax on annual income up to ₹12 lakh in the financial year 2025-26 (FY26).

 

“Good monsoon will help further boost rural demand, which has already started to witness an uptick in the last few months, and this, in turn, will also stimulates urban demand. It is the fourth consecutive year that India is expected to see good monsoon, and this will help boost the staples business,” Angshu Mallick, managing director and chief executive officer (MD & CEO) at AWL Agri Business, told Business Standard. Mallick further explained that food inflation is already at 4 per cent, and this indication (above-normal rainfall) will further increase production of crops, which could ease inflation further.

 

Other consumer company executives echoed the same sentiment. They expect both rural and urban demand to perform better due to good monsoons. 

 

“Urban demand has already started seeing a revival and an above-normal (rainfall) expectation is good for rural. Good monsoon is the single important variable for rural and will also help keep input prices in check as yields are also expected to be higher,” said Mayank Shah, vice president at Parle Products.

 

Shah added that there could be little scope for price hikes due to stable input costs. On internal forecasts, he said that it could see some upward revision and sales teams may be pushed to perform better.

 

“Owing to good monsoon, inflation should ease, which will, in turn, help push urban consumption, and rural revival will continue to march ahead,” Tarun Arora, CEO of Zydus Wellness, said. He expects IMD’s forecast to give a boost to the overall economy and not just to consumption.

 

According to the latest NIQ data, in the October-December quarter (Q3FY25), both urban and rural markets continued to show a sequential recovery in consumer demand. The research firm also noted that rural areas continue to surpass urban areas across most regions of India.

 

In their pre-quarterly updates, Marico, Dabur India, and AWL Agri Business said they witnessed stronger growth in rural markets in the January-March quarter (Q4FY25) compared to urban.