FMCG Sector Thrives on Price-Point Packs, Eyes Rural Uptick

FMCG Sector Thrives on Price-Point Packs, Eyes Rural Uptick

Mumbai, India, December 12, 2023: In a robust testament to the resilience of the fast-moving consumer goods (FMCG) sector, price-point packs (PPP) continue to emerge as the driving force behind its sustained growth. Industry leaders anticipate a surge in rural demand, particularly for low- and medium-price packs, signaling a promising trajectory for the FMCG market.

Speaking at the Confederation of Indian Industry (CII) FMCG Summit, Deepak Subramanian, Executive Director – Home Care at Hindustan Unilever Ltd (HUL), revealed, “One-third of the business in our categories at HUL is locked in price-point packs. The consumption of these packs has witnessed a steady increase over the years. We should be looking at ‘Are we doing enough on the pack strategy and how to get the bridge going up.'”

Sudhir Sitapati, Managing Director and CEO of Godrej Consumer Products, emphasized the importance of tapping into rural markets, stating, “About 60 per cent of India still lives in villages, and companies need to focus their growth strategies in that area. The volume growth in FMCG could be better.”

Industry leaders highlighted the need to target consumers at both ends of the spectrum, with a focus on product range and pricing strategies. Prabha Narasimhan, Managing Director of Colgate Palmolive India, urged companies to play the “price piano” effectively, addressing consumers with varying financial capacities.

As commodity inflation moderates, FMCG firms are concentrating on increasing grammage to provide value to consumers. The industry leaders expressed optimism about the expected volume growth in both rural and urban areas over the next few quarters.

Mohit Malhotra, CEO of Dabur India, shared insights on the growth outlook, stating, “The volume pick-up is taking place in urban and rural areas. We will be back to pre-Covid margins by the end of this year. We have given an EBITDA-margin guidance of 19 per cent, and in another year, it will be back to 20 per cent.”

Saugata Gupta, MD & CEO of Marico India, emphasized the need for a balanced approach, saying, “A healthy mix of volume-based growth and category development is needed in the rural India FMCG market to reignite the desired growth.”

Abheek Singhi, MD and Senior Partner at Boston Consulting Group, Mumbai, noted, “The FMCG industry demonstrated a 3.4 per cent volume growth over the last 15 years, while consumption overall has grown at 6.1 per cent.” The industry remains optimistic about navigating challenges and maintaining a growth trajectory in the ever-evolving FMCG landscape.

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