Bizom’s retail intelligence platform data revealed a 2.1% jump in sales of fast-moving consumer goods (FMCG) between January and November, compared with a year ago, hinting at subdued demand for staples, beverages and personal care products. Even during the ongoing festive season, spending remained flat, with apparel retailers and liquor firms seeing “normal” consumer behaviour.

Companies anticipate an improvement in volumes of goods sold, buoyed by the general elections. Additionally, moderating inflation may help curb incessant price rise, allowing consumers to spend on a wider array of goods, said analysts.

“I think 2024 will be a year for volumes to pick up. Today, there’s growth through premiumization, but the mass market is yet to pick up fully. I think, that will come back once there is a good monsoon and good earnings in the hands of people,” B. Sumant, executive director, ITC, said.

Rural and services economies need to fire for households to get money in their hands, he added. “If there’s a good harvest season and good realization for crops, and money flows into the system, investments going into industries and infrastructure creation will percolate from manufacturing to the services sector and in the hands of more and more people.”

In a 10 October report, on the outlook for consumer goods, BNP Paribas analysts said demand in urban markets remained stable during the September quarter, with little-to-no improvement compared with the previous quarters. Elevated macro inflation, and uneven rainfall distribution in certain regions impeded the anticipated recovery in rural demand.In fact, the CPI inflation inched up to 7% year-on-year in July-August with an increase in vegetable prices, and rural wage growth remained in mid-single digits, they added.

Mass market demand remained especially weak in 2023, with middle-income households grappling with rising costs. “Mass market is showing some tightness, apparel has seen some strain, especially in parts of south India, apart from Uttar Pradesh. This year was not as per our expectations,” said Lalit Agarwal, founder and managing director, V-Mart Retail Ltd. “But, elections should help consumption.”

Liquor major Pernod Ricard India said demand for alcoholic beverages “normalized” after reporting strong growth in 2022. “The Indian economy is very robust and people will continue to do well, aspire to consume better products. We should see a slightly better trend next year than the one we are experiencing in 2023,” said Jean Touboul, chief executive, Pernod Ricard India.

The industry, grappling with elevated prices of glass and extra neutral alcohol for several quarters, is likely past the peak of the inflationary challenges, he added. “We have been through a cycle of quite significant inflation, not only our industry, but globally as well. This is normalizing meaning that while the pressure is still there, it is slowing down.”

That said, companies will continue to expand businesses, chasing premuimization and presence in rural India. “While green shoots of recovery are visible, rural demand is still trailing urban. But we are hopeful of rural markets posting a strong recovery in the New Year. We are seeing the gap between rural and urban growth continuously shrinking. In rural markets, we will be targeting aspirational buyers with more affordable packs of our popular products,” said Dabur India chief executive Mohit Malhotra.

Dabur will continue to launch premium products, he said. “In the urban markets, where growth will be driven by e-commerce, modern trade channels, and expansion of mini metro and class 1 towns, we will focus on premiumization and introducing new premium brands, that relate with millennials and centennials.”

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Published: 28 Dec 2023, 09:18 PM IST