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FMCG companies anticipate low domestic growth in Q4

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In Short:

FMCG companies are expecting slow growth in the domestic market due to subdued demand trends. Rural markets are showing growth fueled by price cuts in staple products. Marico and Godrej saw growth in core categories. International business for FMCG players saw high single to double-digit growth, with challenges due to currency devaluation in some regions. Overall, the sector is hopeful for increased consumption in the coming months.

FMCG Players Anticipate Subdued Growth in Domestic Market

Big news from the fast-moving consumer goods (FMCG) sector – **FMCG players** are bracing for a slow growth in the domestic market for the quarter ending on March 31, 2024.

Price Cuts Spark Demand in Rural Markets

During the quarter, there were price cuts by FMCG companies that actually boosted demand in rural markets. It seems like rural areas were really loving those discounts!

**Dabur**, a major player in the FMCG industry, shared in an exchange filing, “Demand trends remained sluggish during the quarter. Rural growth picked up fuelled by price rollbacks in staples which led to the gap between rural and urban narrowing. With a positive outlook for the rabi crop harvest and monsoon forecast to be normal we expect consumption to pick up in the coming months.”

  • Also read: To boost consumption in rural markets, FMCG players need to offer the right value: BCG’s Namit Puri

Growth in Core Categories

**Marico** saw growth in its core categories, with Parachute Coconut oil posting low single-digit volume growth and Saffola oil delivering mid single-digit volume growth. Meanwhile, **Godrej Consumer Products** witnessed broad-based growth in Home and Personal care, but experienced subdued demand in household insecticide.

On this, Godrej Consumer mentioned in an exchange filing, “Our India organic business continued to deliver strong underlying volume growth at high single-digit. While demand for Household Insecticides has been subdued due to an extended winter in the North and East.”

  • Also read: FMCG sector to see “subdued” growth till September quarter in 2024: Kantar

International Business Highlights

When it comes to international business, FMCG players really shined during the quarter. **Godrej Consumer** mentioned that their GAUM (Godrej Africa, USA, and Middle East) organic business delivered high single-digit volume growth along with double-digit constant currency sales growth. However, due to the Naira devaluation in January, sales in INR terms will see a double-digit decline.

**Marico** also had a great time in the international market, especially with Bangladesh bouncing back from transient headwinds. Even **Dabur** experienced double-digit growth in the international business, with good momentum in the MENA region, Egypt, and Turkey.

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