The current slowdown in the fast-moving consumer goods (FMCG) sector is expected to continue through 2024, according to research firm Kantar. K Ramakrishnan, managing director-world panel division, South Asia at Kantar said growth continued to slow although there has been no fall in FMCG volumes. 

“Q3 and Q4 of CY23 have seen slowing growth and the trend points towards a tight Q1CY24,” Ramakrishnan said.
Kantar has predicted a further decline in demand for daily groceries, household products, and essentials over the next few quarters. This forecast extends the timeline for the volume recovery in the industry, which saw a slowdown in the last quarter—the mild slowdown seen in the September quarter became even more pronounced in Q4CY23.

El-Nino conditions are expected to persist through the first half of 2024 and the initial estimates on the kharif harvest, which were not super-positive, will have some effect on FMCG. Data from the firm showed that the overall volumes expanded by 5.2% in the December quarter, which was lower than 6.9% in the September quarter. This is led by a considerable slowdown in the foods part of the business, as growth here moderated to 5.8% from a strong 8.2% in Q3CY23. Annually, volumes improved by 6.1% in 2023, primarily led by the performance between April and September.

Urban India continued to outpace rural India in 2023—in Q3CY23 urban was growing at 8% and rural was growing at 5.8%. However, both slowed from the previous quarter’s growth, but urban more so. “While 2023 was mostly carried by urban areas, rural has covered up quite a bit of gap, so the trends should ideally be in favour of rural leading 2024 growth,” Ramakrishnan said. Sales volumes in rural markets climbed 4.8%, and in cities by 5.6% in the last quarter, from a year earlier. 

Further, a good rabi season also will help rural areas to a certain extent, provided the weather patterns hold good. The firm has highlighted that the growth in both areas will be muted. The second half of 2023 will feel the effect of a smaller base which should boost the performance in H2CY24.