While companies in the FMCG sector have been struggling to improve their volume growth and posted mid to high single-digit revenue growth in the last couple of years due to severe heat waves in the northern region, heightened competitive intensity, and the general election impact, the industry is betting on recovery this festive season. “The third quarter has consistently been our strongest, fuelled by festive celebrations and increased consumption. This year, we anticipate a similar trend, with consumer demand driving a volumetric growth of approximately 12-15 per cent during the quarter,” said Ritesh Arora, CEO – India & Far East Business, LT Foods Limited, while adding that the festive season traditionally provides a boost to the overall industry.
For Dabur as well, the October-December quarter is critical, though the brand maintained that more than the festive surge, the high demand is recorded for its winter-specific brands like Dabur Chyawanprash, Dabur Honey, and the Real Juice Diwali Gift Pack. On festive season surge, Ankush Jain, Chief Financial Officer, Dabur India Ltd, said, “While it is too early to comment on the festive season, we expect a gradual recovery in festive demand with improving consumer sentiments, particularly in rural India.”
Meanwhile, Manish Aggarwal, Director, Bikano, Bikanervala Foods Pvt Ltd, said, “During the festive season, we typically see a significant uptick in consumer purchasing power, which drives higher sales across all consumer product categories. We’re projecting a substantial increase in sales during the festive season, with expectations of a rise of approximately 25 per cent. Traditionally, the festive season contributes a significant portion of our annual sales, often accounting for a considerable percentage, underscoring its importance in our overall business strategy. We are optimistic that this year will be no different, and we are prepared to meet the increased demand with enthusiasm and readiness.”
Krishnarao Buddha, Senior Category Head, Parle Products, said, “Typically, we see an uptick of 20-25 per cent in terms of numbers during the festive season. Especially there is a skew towards the indulging category and snacking category during the festive times. Our range of snacks and confectionery do extremely well during these times.”
Rural supremacy
The growth witnessed by the segment in the previous quarter was primarily led by a rural recovery, with rural markets outpacing urban growth. Per a report by InCred Equities, the FMCG industry expects the value growth to range in mid-to-high single digits, led by an improvement in volume, aided by gradually improving rural markets, which are expected to grow 300-400 bp higher than urban markets (in value terms).
“The upcoming festive season promises to increase consumption as rural households typically spend more during these periods, providing a boost to FMCG companies,” stated a report by LKP Securities. However, it maintained that even as the mass segment of the rural market has been slow to recover from the high inflation experienced over the last two years, the fact that rural households tend to allocate a larger portion of their budget to food, plays well for the FMCG companies. “Encouragingly, in the past six to twelve months, there has been a gradual stabilization in the income-to-cost mix for rural households. Lower general inflation and a reduction in FMCG prices have provided some relief, improving affordability. This stabilization, combined with price cuts in certain key FMCG categories, suggests that the sector is well-positioned for a recovery in mass segment consumption, particularly in rural areas,” it added.
According to FMCG firms as well, while the urban markets will continue to show steady growth, the rural segment is poised for a more pronounced upswing, contributing to overall sector growth. Ankush Jain from Dabur, said, “Rural growth, particularly, has been on the rebound for us. While the syndicated data also shows that rural demand has overtaken urban demand over the past few months, we have seen demand from the hinterland outpace urban demand for three quarters now. This is a result of the several initiatives that we have rolled out to seed demand in the hinterland. We have been investing in expanding our rural footprint, which has expanded by 22,000 villages to 122,000 villages.”
Manish Aggarwal from Bikano, too reiterated, “Both urban and rural markets have shown comparable growth levels in the recent March quarter. However, given the current penetration levels, we anticipate that rural markets will eventually outpace urban growth.”
All set for festive season with new launches, marketing initiatives, logistical upgradation
Further, with the festive season just round the corner, FMCG companies are gearing up with several initiatives including new product launches, campaigns, etc. to cater to the festive spirit. Rajneet Kohli, CEO and Executive Director, Britannia, said, “We continue to make positive strides in enhancing our product offerings to align with regional preferences. We’re gearing up for our annual series of exciting product launches and campaigns, aimed at deepening our connection with consumers during the festive season. This year, we continue our tradition with the Britannia Shubh Kamnaye Gift Packs, along with festive cakes, special edition packs and designs that add a unique touch to the celebrations. By leveraging new-age technologies like Gen AI, we’re crafting unique and engaging experiences that will ensure Britannia remains at the heart of festive celebrations.”
Bikano too has lined up new product launches to cater to the festive spirit. “These new offerings will be revealed during the festival time and are designed to appeal to a wide range of consumers, with a diverse price range to ensure accessibility for all,” said Manish Aggarwal. The brand is focusing on the Gift packs, namkeens and sweets categories.
Meanwhile, LT Foods is focusing on premium offerings. “We believe this segment will be a key growth driver, especially as consumers increasingly seek quality products for their celebrations,” said Ritesh Arora.
Sundeep Bajoria, Vice President of India Operations, Coca-Cola India, said, “This festive season, our focus is on enhancing convenience and delighting consumers through our refreshing range of products and innovative marketing campaigns. We’re witnessing positive momentum in sales, with a notable trend towards festive consumption and gifting. By prioritizing value and accessibility, we’re ensuring 24×7 access for retailers, empowering them to stay ahead of demand.”
Krishnarao Buddha from Parle Products, said, “We have gifting solutions, gift packs priced at Rs 150, which goes upto about Rs 500-Rs 600. Second, we have built inventory to cater to the festive demand. We also continue our efforts along with our trade partners to boost our presence on the shelves, be it on general trade or modern retail outlets and especially on e-commerce and Q-commerce. Players like Flipkart and Amazon are riding big on festive demand with their events like The Big Billion Day orAmazon Great Indian Festival and we leverage along with them.”
The players in the segment are also focusing on traditional as well as digital media for promoting their key brands. This season, for Dabur, the focus will be on experiential marketing and consumer engagement through initiatives like melas, haats, festive and religious gatherings, and trade activations. Bikano is targeting social media campaigns, influencer partnerships, and special festive promotions, while also enhancing in-store experiences and collaborating with key retail partners to ensure products are prominently featured and easily accessible.
Now with the expected surge in demand, FMCG companies have also strengthened their logistics and supply chain operations. “To ensure we meet the increased demand, we’ve strengthened our logistics and supply chain operations. This includes scaling up production, optimizing inventory levels, and enhancing our distribution network to ensure timely delivery across all regions. Additionally, we’ve collaborated closely with our suppliers and partners to ensure that our supply chain remains robust and responsive, allowing us to seamlessly manage the expected rise in orders. Our goal is to deliver a smooth and efficient experience for both our customers and retailers during this busy period,” said Bikano’s Manish Aggarwal.
Ritesh Arora from LT Foods, said, “Our extensive presence in more than 80 countries supported by our well-entrenched distribution network and global supply chain hubs, backed by automated state-of-the-art and strategically located processing units ensures a consistent supply of our brands across geographies and helps keep our leadership position intact in key markets. In addition, we have significantly extended our reach to over 100 towns across India in the first half of the year, which positions us well to tap into the rising demand in these markets.”
Price correction in picture?
While the sector is looking at a demand surge during the festivities, there are expectations of some price adjustments in the segment and these will largely depend on various factors, such as raw material costs, supply chain dynamics, and overall market conditions. “While we strive to maintain stable pricing, we also remain responsive to market fluctuations to ensure our products continue to offer value to our customers. Any price corrections, if necessary, will be implemented thoughtfully to balance affordability with quality,” said Manish Aggarwal.
Dabur’s Ankush Jain added, “We are seeing food inflation. The inflationary pressures would be mitigated with a of price adjustments and value optimisation initiatives.”