After a challenging 2024 marked by rising input costs and food inflation, India’s FMCG (Fast-Moving Consumer Goods) sector is hopeful for a revival in 2025. Industry leaders anticipate growth driven by easing inflation, rural market rejuvenation, and increasing trends like premiumisation and quick commerce adoption.
Challenges Faced in 2024
The FMCG sector faced inflationary pressures, with rising costs of essential commodities such as palm oil, coffee, cocoa, and wheat. Companies were forced to increase prices by 3-5% or reduce pack sizes (shrinkflation) to retain attractive price points.
Harsha V Agarwal, Vice Chairman & MD of Emami and President of FICCI, highlighted that food inflation disrupted mass consumption patterns, particularly among lower-middle and middle-class consumers. Around 75% of retail spending was directed towards essential food and grocery items, leaving little room for discretionary purchases.
However, Agarwal expressed cautious optimism, noting, “A revival in consumption growth looks promising, supported by a good crop, easing food inflation, and increased government spending on infrastructure and rural schemes.”
Premiumisation and Urban Revival
Mohit Malhotra, CEO of Dabur India, pointed out that urban demand remained subdued in 2024, although rural consumption showed signs of improvement quarter after quarter. He emphasized that premiumisation—where consumers are willing to pay more for superior quality products—will continue driving value growth in 2025.
Malhotra added, “Consumers are increasingly opting for products that offer better quality and enhanced experiences. This trend is particularly strong in urban India and quick commerce channels.”
Focus on Health, Wellness, and Convenience
Sunil D’Souza, MD & CEO of Tata Consumer Products Ltd (TCPL), expressed optimism about 2025, focusing on profitable growth and building future-ready capabilities.
D’Souza said, “Consumer trends such as premiumisation, health & wellness, and convenience are gaining momentum. Quick commerce is growing rapidly, but traditional retail remains highly relevant.”
He also highlighted the increasing influence of Gen Z and millennials, who are expected to account for 76% of consumption by 2030. This shift presents opportunities in packaged food, healthier snacking, and mini-meal solutions.
Innovation and Digital-First Strategies
Saugata Gupta, MD & CEO of Marico, pointed to sustainability, premiumisation, and personalisation as key trends reshaping the FMCG landscape. He noted that the direct-to-consumer (D2C) ecosystem is thriving, with digital-first brands demonstrating resilience and growth.
“Innovation, affordability, and availability will be key drivers of growth going forward,” Gupta added.
Economic Policies and Government Support
Industry leaders are also looking towards the upcoming Union Budget 2025 for measures to stimulate middle-income spending and boost consumption.
Aasif Malbari, CFO of Godrej Consumer Products Ltd (GCPL), said, “We are cautiously optimistic about 2025, supported by an improving economic outlook. Proactive budget measures aimed at boosting consumption could drive sustained growth.”
Quick Commerce and Rural Revival
The rise of quick commerce platforms has transformed the grocery market, making products more accessible. In rural India, demand is expected to grow steadily, driven by government schemes and increased disposable income.
Sundeep Bajoria, VP Franchise Operations at Coca-Cola India, emphasized the company’s focus on traditional and modern retail ecosystems. AI-powered tools like Coke Buddy have expanded accessibility and convenience in both urban and rural markets.
Adapting to Changing Consumer Preferences
The success of D2C brands indicates that Indian consumers are willing to experiment with new products and value propositions.
Pallab Roy, Partner at KPMG India, noted, “With so many choices available, FMCG brands must invest more in marketing and accelerate product innovation to remain competitive.”
Also read: Karnataka Approves ₹9,823 Crore Industrial Projects, Promises 5,605 Jobs
Looking Ahead: FMCG Outlook for 2025
The FMCG industry is cautiously optimistic about 2025, driven by:
- Easing food inflation
- Increased rural consumption
- Continued premiumisation trends
- Growth of quick commerce
- Supportive government policies
While challenges remain, including rising input costs and global economic uncertainties, the sector’s medium-term growth outlook remains strong. Industry leaders believe that innovation, strategic investments, and consumer-centric approaches will play a crucial role in driving sustainable growth in 2025.
This news was originally reported by PTI (Press Trust of India)
