FMCG sector growth seen accelerating over 15% in next 2-3 yrs, says a study

Last year, the FMCG industry grew at 9 per cent till October and rural growth was 1.7 times the urban

PTI March 08, 2017 16:41:26 IST
FMCG sector growth seen accelerating over 15% in next 2-3 yrs, says a study

Mumbai: The fast moving consumer goods industry, that witnessed a slowdown for the past three years, has a potential to grow by more than 15 percent over the next 2-3 years if players in the sector focus on improving brand penetration, a recent study revealed.

"India is at the cusp of the FMCG S-curve and there is significant room to grow over the next 5-10 years. A nominal GDP growth rate of roughly 12 percent over the next three years could signal an FMCG growth by over 15 per cent, depending on player action," the CII-Bain & Company said.

The industry's growth rate compared to GDP has fallen to 0.8 from a historical ratio of 1.2, it said.

FMCG sector growth seen accelerating over 15 in next 23 yrs says a study

Growth in remote areas. AFP

"This slowdown is perplexing; it cannot be fully explained either by changes in consumer spending power which have only marginally decelerated in growth or any significant shifts to non-FMCG categories, including the rise of e-tailing," the report said.

During the slowdown, FMCG companies scaled back growth-oriented investments and shifted focus to sustaining profits at the cost of the top line.

The report noted that the industry has seen the growth rate accelerating in 2016 over the previous two years, with 18 of the 22 categories recording an uptick, driven by rural markets.

Last year, the FMCG industry grew at 9 percent till October and rural growth was 1.7 times the urban.

Across these 22 categories, volume growth was driven by underlying penetration gains and even highly penetrated categories such as toothpaste and hair oil, both with over 95 per cent penetration, recorded material penetration gains, it added.

"Food emerged as the fastest growing segment at 10 percent, with larger towns and more affluent consumers driving this growth. On the other hand, home care grew at 9 percent, which was driven by less affluent consumers residing in small towns and rural areas," it said.

Updated Date:

also read

Why monitoring a child’s growth is important for parents to ensure healthy upbringing
India

Why monitoring a child’s growth is important for parents to ensure healthy upbringing

Growth means an increase in the physical size of the body whereas development refers to improvement in skills and function in your child

Extreme heat in big cities due to population growth, global warming makes it unbeneficial for the poor to move
science

Extreme heat in big cities due to population growth, global warming makes it unbeneficial for the poor to move

Bangladesh's capital Dhaka was the worst-affected city, seeing an increase of 575 million person-days of extreme heat over the study period.

All’s not well in the Middle Kingdom: China finds itself internally divided and globally isolated
World

All’s not well in the Middle Kingdom: China finds itself internally divided and globally isolated

Economically, strategically and even politically, China finds itself in a fix today. If it doesn’t mend its way, it would soon find its superpower dream going kaput.