The fast-moving consumer goods (FMCG) sector in India is expected to experience slightly higher volume growth in 2025-26, driven by steady demand and easing inflation. According to Saugata Gupta, Managing Director and CEO of Marico, the consumption trend is better than what is reported by listed companies, and urban consumption is expected to improve. India’s retail inflation has slowed down to 3.16% in April, its slowest pace in over six years, due to lower food prices. This trend is expected to continue, with several economists predicting a rate cut by the Reserve Bank of India’s monetary policy committee in June, which would boost consumption and economic growth.
The FMCG sector reported an 11% year-on-year value growth in the March quarter, driven by a 5.1% volume increase and a 5.6% price hike. However, high edible oil prices are keeping the basket of staples expensive, resulting in higher value growth. Most consumer goods companies, including Marico and Godrej Consumer Products, are optimistic about demand and expect gradual improvement in urban demand going forward.
Marico is confident of delivering double-digit revenue growth in the current fiscal year, driven by improving demand and distribution in rural and urban markets. The company also remains open to acquisitions that fit its adjacency criteria and address portfolio gaps, particularly in wellness. Gupta expects inflation to persist in the first half of the fiscal year due to the base effect from the previous year’s price increases, but expects copra prices to start softening around the second quarter.
The Union government’s decisions on lowering personal income tax and welfare schemes rolled out over the past year are expected to start bearing fruit, leading to improved consumer demand. The El Nino effect, which led to high food prices last year, has reversed, and food price inflation has come down in the January-March period. Overall, the FMCG sector is expected to experience a gradual recovery, driven by easing inflation, improving demand, and government initiatives. While a dramatic recovery may not be immediate, the sector is expected to perform better than last year, with Marico and other companies optimistic about their growth prospects.