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Piyali Mukherjee posted an update
2 days ago (edited)
Q3 FY25 FMCG Sector Review: Resilient Rural Markets, Sluggish Urban Growth, and the Road Ahead ( Gaurav Tripathi ) :
The FMCG sector continues to navigate a challenging landscape, marked by muted growth, margin pressures, and shifting consumer trends. Here’s a breakdown of key highlights from this quarter, analyzing the performance of major players and the outlook for the future.
Hindustan Unilever (HUL): Slow Top-Line, Strong Bottom-Line
HUL, India’s FMCG giant, recorded a modest 2% YoY revenue growth at ₹15,180 crore but saw a 1% sequential decline. Despite tepid sales, net profit surged 19% YoY to ₹2,988 crore, driven by efficiency gains and cost controls.
The key challenge? Urban demand is cooling, while rural markets have become a growth driver, showing stronger momentum.
Tata Consumer Products: Growth with Margin Pressures
Tata Consumer Products, a leader in salt and the second-largest player in tea, reported an impressive 17% YoY growth in net sales to ₹4,445 crore. However, rising tea prices impacted profitability, leading to a 5% YoY decline in net profit to ₹299 crore.
While the company remains optimistic about volume growth and market expansion, high tea costs remain a key challenge in the coming quarters.
The Bigger Picture: Rural Strength vs. Urban Slowdown
Despite muted overall sector performance, volume growth remained in the low single digits due to contrasting market dynamics:
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Urban slowdown: Rising living costs and inflation are dampening consumer spending.
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Rural resilience: Strong agricultural conditions and government incentives are driving demand in rural areas.
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Cost pressures: Higher input prices are squeezing margins, leading to flat or modest operating profits across the sector.
Growth Outlook for FY25: What’s Next
Despite near-term challenges, the FMCG sector is projected to grow at 7-9% in FY25, driven by rising sales volumes and rural market recovery. Key trends shaping the sector include:
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Premiumization and volume expansion are expected to boost operating margins by 50-75 basis points, reaching 20-21%.
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Strategic pricing and cost control measures will play a crucial role in maintaining profitability.
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Urban demand remains weak, but rural markets and affordability-driven consumption provide a silver lining.
While cost pressures persist, companies are focusing on value-driven growth to sustain profitability. The next few quarters will be critical in determining how FMCG players balance cost inflation with pricing strategies to remain competitive in an evolving market.
Source : https://www.linkedin.com/feed/update/urn:li:activity:7293479223145484288/
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