FMCG Sector To Clock Revenue Growth Of 7-9 Per Cent In FY25, Driven By Surging Sales Volume: CRISIL

Urban consumers are expected to report volume growth of around 7 to 8 per cent, backed by surging disposable incomes and consistent focus on premium offerings by the industry players

The fast-moving consumer goods (FMCG) sector is projected to witness revenue growth of 7-9 per cent in the current 2024-25 fiscal year (FY25), a report by CRISIL Ratings said recently. The report said that this growth will be driven by increased sales volume and a recovery in the rural markets.

Urban consumers are also expected to report volume growth of around 7 to 8 per cent, backed by surging disposable incomes and consistent focus on premium offerings by the industry players, specifically in the personal care and home care segments, reported PTI citing the report.

The report further found that the premiumisation trend and increasing volume will help enhance the operating margin of the FMCG firms by 50-75 basis points to 20-21 per cent. This expansion in margins would have been higher, however, a gain in costs related to sales and marketing, along with the increase in competition among the organised and unorganised players has dampened the growth pace.

Elaborating on the study, Rabindra Verma, Associate Director, CRISIL Ratings, noted, “Revenue growth will vary across product segments and firms. The F&B segment is expected to grow 8-9 per cent this fiscal, aided by improving rural demand, while the personal care segment will grow 6-7 per cent. The home care segment, which outpaced the other two segments last fiscal, is expected to grow 8-9 per cent  this fiscal, led by continued premiumisation push and steady urban demand.” 

The study estimated that the product margins in the current fiscal year are set to grow in low single digits, while the cost of key raw materials in the food and beverages (F&B) segment also increases marginally. At the same time, the price of crucial raw materials in personal care (PC) and home care (HC) segments are expected to remain stable.

Notably, the F&B segment contributes to almost half of the revenue of the sector, while the other two segments, personal care and home care, account for a quarter each of the sector's revenue.