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India's FMCG sector value sales up 10.2%

Bottled soft drinks have surpassed a 50% penetration rate for the first time.

The FMCG sector in India has witnessed a 10.2% increase in value sales over the 2023-24 fiscal year, according to Kantar.

Even when staple products like atta flour are excluded, spend growth remains robust at 9.4%.

Key findings indicate a resurgence in rural FMCG purchases despite urban households facing financial constraints.

“Across India as a whole, FMCG shopping frequency has risen, with households now making 156 trips per year either in store or online,” the report noted.

“Frequency has been growing for some time now, although this has levelled off during the last two quarters,” it added.

Additionally, there is also a shift towards purchasing larger packs rather than increasing pack numbers. This trend is particularly evident in discretionary categories such as bottled soft drinks, which have crossed the 50% penetration mark for the first time, driven by anticipated summer demand. 

Fabric softeners also show growing popularity, now purchased by one in four households across the country.

“Driving penetration is the major factor behind securing a brand’s future growth. Not only does this strategy bring in more buyers, but it also boosts consumption. In India, local brands are excelling in this area – including Tata Gemini, Sunlight Washing Powder, Goodricke tea and Parle G biscuits,” the report stated.

Groceries make up more than 24% of quarterly household spending in India, despite inflation easing. In Q1 2024, average shoppers spent 18% more compared to the peak prices in Q2 2022. 

Urban households spend 1.6 times more than rural counterparts on groceries. Despite price hikes, essential items like cooking oils are prioritised, with 27% of households increasing spending rather than cutting back.

Overall, India’s FMCG market appears promising against the backdrop of an 8.2% GDP growth in the 2023-24 fiscal year. 

Although challenges persist, including varying consumer sentiments across regions, optimism is rising with 16% of households now feeling financially secure compared to 8% during peak inflation.
 

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