The Fast-Moving Consumer Goods (FMCG) sector is projected to maintain a steady growth rate of 7-9 per cent in 2024, as per a report released on Tuesday. This growth is supported by the government’s efforts to boost consumption and generate employment opportunities. The sector's resilience, adaptability, and strong government backing, combined with ongoing digital transformation initiatives, place it in a favourable position to navigate uncertainties and emerge even stronger.
The report released by ICICI Lombard General Insurance states, "Looking ahead, the FMCG sector in India is poised for sustained growth, with forecasts indicating a 7 to 9 per cent expansion in 2024."
The FMCG sector also confronts several obstacles, including inflationary pressures, weakened consumer confidence, and persistently high unemployment rates. Highlighting its significant economic impact, the industry boasts a burgeoning economic footprint surpassing Rs 9.1 lakh crore and plays a pivotal role in driving India's economic expansion and job creation.
Furthermore, the online sales channel for FMCG products is experiencing robust growth, now valued at Rs 1.7 lakh crore. Segments like Direct-to-Consumer (D2C) exemplify a rapid shift towards digital transformation and evolving consumer purchasing patterns.
"Such digitalisation trends underscored the industry's adaptability to changing market dynamics and its proactive approach towards catering to digitally savvy consumers," the Corporate India Risk Index 2023 report said.
Following the pandemic, the FMCG industry faced challenges, particularly with rural sectors experiencing consecutive quarters of decline. Despite these hurdles, the industry demonstrated resilience and adaptability in response to shifting consumer dynamics. As a result, it experienced a significant rebound in volume and value growth during the latter half of 2023.
The report added that “The Q3 2023 witnessed an impressive 8.6 per cent volume growth nationwide, with rural markets contributing significantly with a 6.4 per cent growth rate.” This growth indicates a positive consumption environment.
Governmental initiatives such as Gati Shakti and Amrit Kaal Vision 2047 were pivotal in strengthening the FMCG sector's foundational framework and nurturing its long-term growth trajectory. As a result of these initiatives, the sector's risk index declined from 68 to 66, the report said.