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FMCG Sector Rebounds with 7.5% Q3 Revenue Growth, Rural Demand Leads

The Indian FMCG sector has signaled a significant recovery, with Q3 revenue growth jumping to 7.5% from just 2% in the previous quarter. This rebound is largely driven by a healthy 5.4% volume increase, supported by moderating inflation, a good monsoon, and government initiatives. Industry reports highlight that rural markets are now growing faster than urban ones, with the food category and hair oil segment showing clear momentum. With stable raw material costs and summer season loading ahead, the sector is optimistic about continued volume-led growth in Q4.

Key Points: FMCG Recovery: Q3 Revenue Growth Jumps to 7.5%, Rural Demand Up

  • Revenue growth up sharply to 7.5% in Q3
  • Volume growth of 5.4% (ex-ITC)
  • Rural markets growing ahead of urban
  • Food & hair oil categories show recovery
2 min read

FMCG sector signals recovery as Q3 revenue growth jumps to 7.5%: Report

India's FMCG sector shows strong recovery with 7.5% Q3 revenue growth, driven by 5.4% volume increase and a rural market revival. Read the key report.

"exit growth across companies has been healthy which makes us more upbeat on Q4 outlook - Centrum Broking Report"

Mumbai, February 23

The Indian Fast-Moving Consumer Goods sector is showing a significant recovery, with the consumer staples coverage universe of Centrum Broking reporting a sharp sequential pick-up in top-line growth from 2% year-on-year in Q2 to 7.5% in Q3. This growth was largely driven by a volume increase of 5.4% excluding ITC, signalling a "silver lining" for the industry after several years of growth and margin challenges.

According to the report the industry has seen early signs of a pick-up in demand due to favourable macros such as moderating inflation, a favourable monsoon, and a healthy crop outlook, alongside government initiatives like GST rationalisation and income tax cuts.

While the third quarter experienced some one-off impacts from GST-led disruptions, the report notes that "exit growth across companies has been healthy which makes up more upbeat on Q4 outlook."

The report highlights that the sector is benefiting from a shift in momentum, stating, "Q3 has seen some benefit of restocking as well as pick-up in volumes due to grammage increases." Centrum believe that the coverage companies are set to "see sequential pick up in terms of top line and volumes," aided by the fact that the "RM basket has turned favourable which will aid in healthy margin trajectory." Management commentary suggests that the challenges of the past few years "are largely behind us."

Key takeaways from industry leaders indicate that rural markets are now growing ahead of urban markets, while quick commerce continues to lead the growth charge. The food category has shown a clear pick-up in volume momentum, specifically citing the performance of Nestle and Britannia. In the Home and Personal Care (HPC) segment, the hair oil category has also seen a notable recovery.

The positive trend is expected to carry into the final quarter of the fiscal year. The report anticipates that "Q4 will most likely see benefit of summer loading and pick-up in consumption," supported by a stable raw material basket. Despite minor disruptions in international pockets like Bangladesh, the overall sentiment remains optimistic as the industry transitions from a period of stagnation to volume-led growth.

- ANI

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Reader Comments

R
Rohit P
Good to see volume growth is back. For too long, companies were just increasing prices (grammage cuts) to show growth. Real growth is when more people can afford to buy your product. Hope the companies don't get greedy and raise prices again now that demand is picking up.
S
Sarah B
Interesting data point about rural growth outpacing urban. That's a reversal of the long-term trend. It suggests government support and a good harvest are having a real impact at the grassroots level. This is crucial for balanced economic development.
A
Aman W
The report mentions "silver lining" but let's be cautiously optimistic. One quarter of good growth doesn't erase years of pressure. We need to see if this volume growth continues through next year, especially with elections coming up. Political stability will be key.
K
Kavya N
Hair oil category recovery makes sense! With festivals and weddings in Q3, there's always a spike. But the real test is if people keep up the usage. Also, quick commerce is a game changer – getting detergent or biscuits in 10 minutes definitely increases impulse buys! 😄
V
Vikram M
Stable raw material costs are the unsung hero here. When palm oil and wheat prices are crazy, everything becomes expensive. Hope the government keeps a check on food inflation. A stable RM basket means companies can focus on volume, not just price hikes. Good for everyone.

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