The FMCG sector is projected to witness “subdued” growth in 2024 till the September quarter, according to research and insights firm Kantar. It attributed this to various factors including uncertain outlook for agricultural sector and elections expected to have little impact on FMCG consumption. But it expects FMCG growth to get “progressively” better in the later part of the year.

It added that scorching summers may boost sales of categories such as soft drinks, ice creams, sun screens and laundry, but noted that growth in these categories will have “negligible impact” on overall FMCG consumption.

“As a result, we do see FMCG growth to be subdued, at least until Q3 of 2024. Keeping in mind the stronger first half of 2023, we may even end up seeing some stagnation in the early part of the year, with things getting progressively better,” Kantar said in its outlook for 2024

El-Nino effect

Stating that agriculture outlook for 2024 is a “mixed bag, it added that dry weather due to El-Nino is expected until the first half of the year. The El-Nino effect has also impacted Kharif crop harvests.“ As per the first estimates of Kharif crops released, almost all Kharif crops have seen lower yields due to uneven rainfall. This is likely to impact the first half of 2024. However, the Rabi sowing, though mildly disturbed, is much better with record hectarage under the wheat crop. El-Nino is also expected to wane by the middle of the year, and with the Rabi harvests close by, without any unexpected weather phenomenon, the year might yet turn good, especially in the second half,” Kantar stated in the February FMCG Pulse Report.

The research and insights firm also noted that though 2024 is an election year, in the past election years, no surge was witnessed in FMCG growth rates. “In 2009, the consumption growth was 0.7 per cent; in 2014, it was static; and in 2019, it was negative,” it said. It added that it does not see General Elections significantly impacting FMCG growth rates at the national level. 

Annual consumption

Kantar also noted a marginal decline in average annual FMCG consumption in 2023 to 117.1 kg per household from 117.2 kg in 2022. It added that out of over 90 categories and subcategories that it tracks, about 50 per cent lost consumption or were static. In a bid to manage expenses, shoppers seemed to have cut back on spending on categories such as cooking oils, washing powders, basmati rice and salt.

The research and insights firm also pointed out to sudden drop in value growth in December quarter of 2023 due to reduction in prices by key players. “Categories where we see slower value growth, compared with volume growth in the latest quarter, are Hand wash, Body wash, Shampoos, Floor Cleaners, Cooking Oils,” Kantar added.