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FMCG firms witness improved demand, rural growth up in Q2

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In Short:

FMCG industry saw volume growth improve and gradual recovery in rural demand trends in June quarter. Analysts predict low-to-mid single-digit volume growth for key companies. Dabur India and Marico noted sequential improvement in demand in June quarter. Rural growth outpaced urban growth in March quarter and is expected to continue in June quarter. Heatwave drove sales of summer-centric products like cold beverages and ice creams.

FMCG Industry Sees Growth in Volume and Rural Demand

Hey there, folks! Exciting news from the FMCG industry – it’s all about growth in volume and a gradual recovery in rural demand trends during the June quarter. Let’s dive into the details!

Summer-centric Portfolios Driving Strong Growth

Companies with **summer-centric portfolios** are set to report stronger growth in volume in Q1 FY24, thanks to the intense heatwave across the country. Analysts are expecting key listed companies in the industry to achieve low-to-mid single-digit volume growth in the June quarter.

Positive Updates from Dabur India and Marico

**Dabur India** shared in its quarterly update that the June quarter witnessed an improvement in demand, especially with rural growth picking up. The company expects its domestic business to achieve “mid-single digit” volume growth. Similarly, **Marico** also noted a modest uptick in underlying volume growth in its domestic business during the June quarter.

Rural Growth Outpacing Urban Growth

In the March quarter, rural growth outpaced urban growth for the first time after a slower pace in the past year. Rural volume growth was at 5.8 per cent compared to urban volume growth at 4.7 per cent. This trend is expected to continue in the June quarter as well, with rural growth outpacing urban growth.

Optimistic Outlook for Volume Recovery

Despite challenges like the impact on out-of-home consumption due to the intense heatwave, market analysts remain optimistic about volume recovery in the FMCG sector. **Nuvama Institutional Equities** predicts that volume growth in Q1 FY25 will be in the low-to-mid single-digit range, fueled by factors like the heatwave, general elections, and fewer marriage days.

On the other hand, **Motilal Oswal Financial Services** expects steady demand trends in 1QFY25, with the summer portfolio likely to outperform. They anticipate marginal improvements in volume growth quarter-on-quarter.

Looking Ahead

Rural markets have shown a gradual recovery compared to urban markets in the June quarter. Company managements are positive about volume recovery in FY25, with hopes pinned on government initiatives to boost rural income in the upcoming budget.

Exciting times ahead for the FMCG industry as we see growth in volume and rural demand! Stay tuned for more updates!

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