Source: Financial Express, 07 March 2023
The FMCG industry is optimistic about at least 20 per cent growth in 2023 after an ‘exponential growth’ in 2022. “We saw a high demand and a growth of more than 30 per cent from the last fiscal year. We have already crossed Rs 4500 crores turnover, which was projected till the end of March 2023,” said Ashish Khandelwal, Managing Director, BL Agro.
With the ongoing wedding season leading up to Holi, FMCG companies traditionally witness a strong Q4 in terms of consumption. “The Q4 and Q1 of next FY will be good as the market is under control. Unlike last year it went up due to the Russia-Ukraine war, this year it is stable,” said Angshu Mallick, MD & CEO, Adani Wilmar Ltd. The staples categories like besan, dal, atta and rice have shown huge improvement and brands which are good in quality are surely going to grow and can expect better results, he added.
BL Agro is expecting to witness an increase of 100 per cent in sales and has also set up a new manufacturing unit to double its production and fulfill the demand, he added. “2023 will see an upward graph for the FMCG market. FMCG is one of the segments where the demand can never go down, the growth percentages may definitely vary,” said Ashish Khandelwal.
“FMCG industry grew by 7-8 per cent in 2022 in terms of sales and is likely to grow at the same pace in 2023 if the growth trajectory remains the same. I expect the Food & Beverages sector may grow around 10-12 per cent whereas the Home and personal care segments are likely to grow 8-9 per cent in 2023,’ said Azaz Motiwala, Founder at IKON Marketing Consultants.
Further, the FMCG companies reiterated that there had been a transition from unorganised to organised segment in 2022 which will continue in 2023 and the FMCG sector is poised to outgrow traditional growth rates. “Additionally, digitalization is likely to be a significant driving force in the growth and development of the FMCG sector in 2023,” said Manish Bandlish, Managing Director, Mother Dairy Fruit & Vegetable Pvt Ltd.
For NextG Apex India Pvt Ltd which sells brands like Mamafeast and Naturefest, the sales revenue for its service model is expected to grow by 30 per cent CAGR as compared to last year, and for its own labels, sales is expected to grow by more than two times in 2023. “ It is expected that around six to seven crores of revenue will be attained during this period,” said Amarnath Halember, Executive Director and CEO, NextG Apex India Pvt Ltd.
Rural or Urban driving the growth?
While the demand for the FMCG companies are coming from both – urban and rural markets, the segment, after a demand slump since the last few quarters, is witnessing green shoots of recovery in the rural markets. In the third quarter ended December 31, 2022, the companies reported growth in the urban markets. Rural markets, which contribute around 35 per cent of FMCG industry sales, are showcasing signs of improvement on the back of encouraging winter crop sowing, indications of higher farm income and continued government stimulus.
“It has been evident that the increase in sales is maximised more in rural areas or tier-II & tier-III towns as compared to the metropolitan cities. The growth in metros will be stagnant in 2023,and the major growth is anticipated to come from tier-II & -III towns,” said Amarnath Halember.
PepsiCo India too is witnessing strong demand from rural India for its foods and beverage products. “This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones,” said Ahmed ElSheikh, President, PepsiCo India.
On the price front, FMCG players believe that the present prices will remain stable and there will be no price change right now. “I think the present prices are stable. It has come down from the top and the consumers are accepting it. We see good demand at these prices. So, I don’t think prices are likely to go down because it is more technical in nature. We feel that these are comfortable prices,” added Angshu Mallick. In terms of products, packaged goods, ready-to-eat segments, and health and wellness products are expected to bring in most sales.