India’s fast-moving consumer goods (FMCG) industry recorded an 11% year-on-year growth in value during the March quarter, according to NielsenIQ data. This was attributed to a 5.1% increase in volume and a 5.6% rise in average prices. Despite the easing of general inflation, rising edible oil prices kept staple goods expensive, contributing notably to the value growth.
Interestingly, higher growth in units sold compared to volume implies a shift towards smaller pack sizes, indicating consumers’ cautious spending behaviour amidst price sensitivity.
Read More: How Many FMCG Companies Are Listed in India? Featuring ITC, HUL & More.
Rural India continues to drive FMCG sector growth. In the March quarter, rural volume growth was recorded at 8.4%—a dip from the previous quarter, yet still four times the growth seen in urban areas. Urban volume growth fell to 2.6% year-on-year, reflecting a deceleration in consumption across cities.
This rural resilience has been echoed by large FMCG companies as well. Hindustan Unilever Ltd (HUL), in its recent earnings call, reported a steady recovery in rural markets, terming them “resilient and robust” over the past few quarters.
Food category growth in the Q1 March quarter slowed to 4.9% from 6% in the December quarter, primarily due to falling volumes in staples like edible and palm oils, whose prices surged. On the other hand, the home and personal care (HPC) category fared better with 5.7% consumption growth, particularly in rural areas.
This divergence suggests that while consumers are cutting back on food staples affected by price volatility, they continue to spend on personal care and household essentials.
Smaller players are increasingly becoming growth leaders in the FMCG space. With a favourable low base and strong traction in rural regions, small manufacturers witnessed steady volume expansion in both food and HPC segments.
In contrast, larger FMCG companies reported halved volume growth compared to the December 2024 quarter. Easing inflation and changing consumption patterns appear to be enabling smaller firms to outpace the market.
The March quarter underscored the growing dominance of e-commerce, particularly quick commerce, in India’s FMCG landscape. While traditional trade volumes rose to 6.2% in Q1 2025 (up from 5% a year earlier), they saw a sequential decline. Modern trade, meanwhile, reported a 3.3% drop in year-on-year volume.
E-commerce continues to expand its reach across metros, eating into the share of both modern and traditional retail. Traditional trade’s share fell by 1.5 percentage points to 62.5%, while modern trade dropped by 2.8 percentage points year-on-year.
Factors such as increased online penetration, growing purchase frequency, and larger basket sizes have accelerated the shift toward digital platforms. Nestle India, for example, reported that 8.5% of its FY25 domestic sales came from e-commerce, primarily driven by quick commerce.
While no projections or recommendations are made, indicators such as monsoon forecasts, tax revisions, and shifting consumption patterns will likely influence upcoming trends in the FMCG space. As the market continues to evolve with changing consumer behaviours and trade channel dynamics, both established players and new entrants will need to adapt accordingly.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: May 8, 2025, 2:23 PM IST
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