20 June 2018

Slow growth expected in India’s FMCG sector

Slow growth expected in India’s FMCG sector

According to Ambareesh Baliga, COO, Way2Wealth, in the coming years there would be a less growth for the fast moving consumer goods i.e. FMCG sector. The trading has grown faster than the equity market over the recent years and multi commodity exchange i.e. MCX, which has more than 80 per cent share of commodities market, has a growth rate of 62% in volumes and 63 % in volumes in 2011 from 2010.

According to the reports, the FMCG segment has shown marvellous performance since 2008. The worst performance of this sector was during 2006-2007, and on the other hand the best performance was over the past two years, which confirms the defensive nature of the sector from the stock market’s point of view.

The report says that, there was a growth in the past four years was mainly due to newly found wealth among the masses, overall economic progress in the past decade, and higher aspiration levels due to better awareness through media and other channels. The major FMCG companies were also able to improve their margins by reducing prices as well as package weights. But, with the standard FMCG packaging norms again getting implemented, it might be a loss for the sector, which is already feeling the pinch of higher raw material and operational costs and elasticity of demand beyond certain price points. The consumers are holding themselves back in spending, especially in the services sector, and are ultimately seeing a slowdown in their respective businesses, which has resulted in no increments in remuneration.

As per the reports, with FDI in multi-brand retail, a few big shops will put up their business over the next few years. Because of the private labels gaining popularity with home grown retail players, even the listed FMCG players will find it tougher. The CAGR for the next 4-5 years is slow at about 14 per cent. The market is expected to be in optimistic mode for the next few months, which could also mean a period of underperformance for the FMCG sector. There will be a large opportunity, especially among the home-grown players, which have expanded beyond the Indian subcontinent to geographies that could see explosive growth over the next decade, especially Africa, Southeast Asia and parts of West Asia. Hence companies like ITC, Dabur, Marico and Godrej Consumer might offer better value.

Source: mydigitalfc.com

Leave a Reply

Protected with IP Blacklist CloudIP Blacklist Cloud
Market Research Times
(C) 2012-13 Powered By NOVONOUS
All images and content Copyrights remain with the
photographer and original authors wherever applicable.