FMCG companies target volume growth recovery for FY25, banking on lower inflation and good monsoon

After witnessing sluggish volume growth for the past two years, FMCG companies are firmly honing in on volume growth recovery for FY25. They are betting on a lower inflationary environment, normal monsoon projections, and a good rabi crop to support higher volume growth. Companies such as Britannia Industries, Nestle India, Dabur India, and Parle Products stated that they are looking to bolster volume growth this fiscal year.

On Monday, Britannia Industries’ management stated, in an investor call, stated that the company is aiming for “double-digit volume growth in FY25” post-elections and monsoons, as per an analyst report by Nuvama Institutional Equities.

• Read:FMCG industry set to grow at 4.5-6.5% in 2024, lower than 2023: NielsenIQ

Mayank Shah, Vice-President of Parle Products, told businessline, “In FY23, FMCG companies faced high-base effects in post-Covid times that impacted volumes. In FY24, factors such as unprecedented inflationary pressures led by edible oils and erratic monsoons led to sluggish volume growth. FMCG companies had to hike prices several times to cope with this inflation. Now with a more controlled inflationary environment, good rabi crop and forecast of a good monsoon, most large FMCG companies are aiming for higher volume growth.” He said companies have been focusing on price cuts and higher promotions in a bid to bolster volumes.

• Read:FMCG Cos’ skincare business declines in Q3 on low-intensity winter, unseasonal rain; drags winter portfolio

“Many large FMCG companies, including us, which have seen volume growth in low single-digits in FY24, are aiming for a volume growth in the range of 9-12 per cent on an average,” Shah added.

Last week, Suresh Narayanan, CMD of Nestle India, said, “The strategy of the company has been a penetration-led strategy. So my objective is clearly to raise volume growth and get back to it as strongly and as quickly as possible and not linger on to value growth.” The packaged food major garnered 4-5 per cent volume growth in the March quarter. Narayanan said that the company expects commodities such as edible oils and wheat prices to be stable. The company is witnessing runaway inflationary pressures in cocoa and coffee but is “trying to avoid price hikes as best as possible”.

• Read: Leading FMCG companies look to ramp up direct rural reach

Dabur India CEO Mohit Malhotra in an earning call on Friday said, “ For us to grow, strong volume growth is mandatory. We are aiming for a mid to high single digit volume growth. We expect our growth in this fiscal to be mostly driven by volume growth.”

COMMENT NOW