Rural FMCG's market growth outpaces urban in Q4 as qcom sees growth

Rural market growth continued to outpace that from the urban market for the FMCG industry in the March quarter, and margins remained under pressure as prices of some key commodity inputs remained at peak levels, according to business updates by leading players.

Besides, on the channel side, traditional trade (Kirana shops) continued to be under pressure, while modern trade channels, e-Commerce and Quick commerce maintained their growth momentum, said listed FMCG companies like Dabur, Marico and AWL Agri Business (formerly Adani Wilmar) in their quarterly updates.

The persistent food inflation continues to impact demand in the urban market, which contributes nearly two-thirds of the total FMCG sales.

However, FMCG companies are hopeful of a profitable growth in FY'26 despite the current headwind, banking on factors which include moderating retail and food inflation as well as forecasts of a normal monsoon.

Homegrown FMCG firm Dabur, in its quarterly update for the fourth quarter of 2024-25, said: "During Q4, rural continues to be resilient and grew ahead of urban markets."  "Overall, FMCG volume trends continued to be subdued during the quarter," said Dabur India.

AWL Agri Business said it "witnessed better growth in rural towns compared to urban markets, especially in the Foods category."  Marico said during the quarter FMCG sector experienced stable demand trends amidst the "improving trajectory in rural" market.

It had mixed trends across mass and premium urban segments, said the company which owns brands such as Saffola, Parachute and Livon.

Dabur, which expects its revenue to decline in Q4 and a contraction of 150-175 basis points in operating profit margin due to inflation, said delayed and truncated winters during the quarter also had an impact.

Over the growth of Quick-Commerce channels, AWL Agri Business said its sales from this hyper local delivery system actually doubled y-o-y in the March quarter.

"Our quick commerce sales volume has experienced exceptional growth, marking the best quarter in two years with a remarkable 100%+ YoY increase in Q4," it said, adding this growth reflects its strategic focus on operational improvements, particularly in product assortment, availability, and promotions and advertisements.

Dabur said in continuation of the previous trends, "organised trade channels, which include modern trade, e-commerce and quick commerce, maintained their growth momentum, while general trade continued to be under pressure."  Moreover, Dabur and Marico, which have a presence in some foreign markets, expect a double-digit growth in constant currency terms in the March quarter.

Dabur's key international markets, including the MENA region, Egypt, and Bangladesh, are likely to post strong performance, leading to robust double-digit growth. Dabur gets nearly one-fourth revenue from international business.

Marico's international business delivered mid-teen constant currency growth driven by broad-based growth across most markets.

Over the margins, the Mariwala family-promoted firm said a "contraction" is expected to be largely in line with the preceding quarter.

"Among key inputs, copra and vegetable oil prices remained firm at peak levels, while crude oil derivatives remained rangebound," said Marico.

Despite sharp input cost pressures and continued commitment towards A&P investments, Marico expects marginal operating profit growth on a year-on-year basis in this quarter.

"We expect to maintain the double-digit revenue growth momentum in FY26," said Marico over the outlook.

Dabur said it remains committed to driving profitable growth despite current headwinds in demand.

"Our internal efforts such as investing in brand building, enhancing go-to-market strategy and increasing operational efficiency will enable us to achieve this objective," it said.