The slowdown in the Indian FMCG (Fast-Moving Consumer Goods) market in recent months, including November 2024, can be attributed to several factors:
- Reduced Consumer Spending: Urban consumption has declined, reasons can be attributed to factors such as high inflation, high rentals, job insecurities, falling compensations, lower salary hikes, etc. Urban growth in consumption has dropped to 2.8% compared to earlier higher rates, reflecting softer demand across categories
- Economic Pressures: Rising inflation, particularly in food prices, has squeezed household budgets. High import duties on essentials like cooking oil and volatile prices for staples like onions and pulses have dampened discretionary spending
- Rural Challenges: While rural areas continue to outpace urban in terms of growth, they too have seen a moderation. Uneven monsoons have impacted agricultural incomes, contributing to slower consumption recovery
- Regulatory Actions: The Reserve Bank of India's tightening of lending norms, particularly for unsecured loans, has curtailed financing options for consumers. This has negatively impacted big-ticket purchases in both urban and rural areas
- Market Saturation and Slow Income Growth: Urban demand for durable goods is now largely driven by replacement rather than new purchases, and income growth has slowed, particularly among non-salaried urban workers, creating further stress.
Despite these challenges, the FMCG sector remains resilient, supported by rural demand and stable price growth. However, the broader economic pressures and cautious consumer behavior are expected to influence the market in the near term.
