The FMCG sector in India expanded due to consumer-driven growth and higher product prices, especially for essential goods. FMCG market reached US$ 167 billion as of 2023. The total revenue of the FMCG market is expected to grow at a CAGR of 27.9% from 2021-27, reaching nearly US$ 615.87 billion. In 2022, the urban segment contributed 65% whereas rural India contributed more than 35% to the overall annual FMCG sales. Good harvest, government spending expected to aid rural demand recovery in FY24. India’s fast-moving consumer goods (FMCG) sector grew 6.4% by volumes in the October-December 2023 quarter, led by positive consumption across the country. The sector had grown 8.5% in revenues and 2.5% in volumes in FY23. In the January-June period of 2022, the sector witnessed value growth of about 8.4% on account of price hikes due to inflationary pressures. In the second quarter of 2022, the FMCG sector clocked a value growth of 10.9% YoY — higher than the 6% YoY value growth seen in the first quarter. India includes 780 million internet users, where an average Indian person spends around 7.3 hours per day on their smartphone, one of the highest in the world. Resilience needs to be the key factor in the manufacturing process, daily operations, retail and logistic channels, consumer insights and communication that will help FMCG companies to withstand the test of time and create more value for consumers in the long run.
India’s FMCG sector has long been the top spender in the country’s advertising market, commanding nearly one third share Rs. 31,000 Crore (US$ 3.75 billion) in 2023 of the total Advertising expenditure.
Indian food processing market size reached US$ 307.2 billion in 2022 and is expected to reach US$ 470 billion by 2028, exhibiting a growth rate (CAGR) of 9.5% during 2023-2028. Digital advertising grew to reach US$ 9.92 billion by 2023, with the FMCG industry being the biggest contributor at 42% share of the total digital spend. From April 2000-March 2024, the food processing industry received US$ 12,587 million in FDI. The Union government approved a new PLI scheme for the food processing sector, with a budget outlay of Rs. 109 billion (US$ 1.46 billion). Incentives under the scheme will be disbursed for six years to 2026-27.
In February 2024, Varun Beverages announced of investing Rs. 3,500 crore (US$ 421.69 million) to setup manufacturing plants, while generating 1,500 employment opportunities.
In October 2023, Unilever announced that it had entered into an agreement to sell Dollar Shave Club with completion expected before the end of 2023. Unilever will retain a minority shareholding of 35%.
In June 2023, Skincare brand VLCC acquires men's grooming brand Ustraa.
In May 2023, Reliance Retail Ventures completes the acquisition of a controlling stake in Lotus Chocolate.
In January 2023, ITC announced plans to acquire 100% of Sproutlife Foods, a D2C startup and parent company of health food brand 'Yoga Bar' over a period of three to four years. In December 2022, Hindustan Unilever Limited announced its foray into the ‘Health & Wellbeing’ category through strategic investments in Zywie Ventures Private Limited (“OZiva”) and Nutritionalab Private Limited (“Wellbeing Nutrition”).
Entrepreneurs interested in setting up the food-related FMCG industry can set up their processing units in the government-designated agro-processing clusters, which help cut down the plant setup costs. With the advent of online retail and e-commerce, FMCG businesses can market and sell their products across the country without investing much in marketing activities.
Union Budget 2023-24 has allocated US$ 976 million for PLI schemes that aim to reduce import costs, improve the cost competitiveness of domestically produced goods, increase domestic capacity, and promote exports. Union budget 2023-24 focuses on reviving rural demand by boosting disposable income, allocation to farms and higher fund allocation on rural infrastructure, connectivity, and mobility to create long-term jobs.
The FMCG sector employs around three million people accounting for approximately 5% of the total factory employment in India. FMCG sales in the country were expected to grow 7-9% by revenues in 2022-23. The key growth drivers for the sector include favourable Government initiatives & policies, a growing rural market and youth population, new branded products, and the growth of e-commerce platforms. The number of active internet users in India will increase to 900 million by 2025 from 622 million in 2020. In 2022, India’s consumer spending was US$ 2,049.57 billion. Indian villages, which contribute more than 35% to overall annual FMCG sales, are crucial for the overall revival of the sector. E-commerce now accounts for 17% of the overall FMCG consumption among evolved buyers, who are affluent and make average spending of about Rs. 5,620 (US$ 68).
The food and beverage sector is one of the essential components of the FMCG market, which accounts for about 3% of its GDP. In 2022, food and beverages accounted for 30% of total household spending in the country.
For 51% of Indians, spending on healthcare products increased in the 12 months to August 2021. The covid-19 pandemic has driven Indian consumers to focus their spending priorities on healthcare.
The personal and household care category in the FMCG sector grew from 32% in 2019 to 40% in 2020. Indian households spent nearly Rs. 47 Lakh crore (US$ 60 billion) on FCMG, in the year ending February 2021.
The FMCG sector’s revenue reached Rs. 4.7 lakh crore (US$ 56.8 billion) as of December 2022. FMCG sales in the country grew 7-9% by revenues in 2022-23. The FMCG industry has grown by 10.9% in the quarter ending June 2022, versus 6% in the previous quarter. The sector had grown 8.5% in revenues and 2.5% in volumes last fiscal year. In the January-June period of 2022, the sector witnessed value growth of about 8.4% on account of price hikes due to inflationary pressures. Consumption in urban markets sustained at 1.2% during the September 2022 quarter as compared to 0.6% in the quarter that ended June 2022. Rural households play an important role, contributing 35-36% Of India’s FMCG market. Small manufacturers (apart from the Top 400 players or manufacturers with less than US$ 13.6 million (Rs. 112 crore) offtake this year) are driving consumption and witnessed a positive volume growth of 0.5% in Q3 of 2022. The total revenue of the FMCG market is expected to grow at a CAGR of 27.9% from 2021 to 2027, reaching nearly US$ 615.87 billion. The Indian health-tech market is expected to grow at a CAGR of 39% and touch US$ 50 billion by 2033.
Accounting for a revenue share of around 65%, the urban segment is the largest contributor to the overall revenue generated by the FMCG sector in India in 2022. India's villages contributed more than 35% to overall annual FMCG sales in 2022. In Q2, 2022, the FMCG sector clocked a value growth of 10.9% year-on-year — higher than the 6 per cent y-o-y value growth seen in Q1. Urban markets clocked a positive volume growth of 0.6%. Good seasonal harvests, resulting in improved liquidity in the hands of farmers, higher government spending on infra, and the wedding season are aiding consumer sentiment in India's villages. Dabur India derived about 47% of its sales from rural India, and it is stepping up direct distribution to cover more than 100,000 villages as demand starts recovering in rural areas. Rural markets contribute about 45% to Emami's annual sales. Nestle India plans to expand its reach to 1,20,000 villages by the end of 2024. In 2022, the month of November saw rural volumes growing 6-7%, compared to 2-3% in the previous two quarters. Good harvest, government spending expected to aid rural demand recovery in FY24
In the third quarter of 2023, urban markets experienced an enhancement in the non-food sector, witnessing a consumption growth rate of +10.4%, which marked an increase from the previous quarter's +8.9%.
While modern trade maintains its high double-digit growth of 19.5%, rural markets are still recovering at a volume growth rate of 6.4%. The growth rates in the food and non-food categories are 8.7%, respectively.
The Indian e-commerce market is anticipated to grow from US$ 83 billion in 2022 to US$ 185 billion in 2026.
As per CRISIL, India's dairy industry is projected to experience a healthy revenue growth of 13-14% in FY25, driven by strong consumer demand and increased raw milk supply.
The market has grown exponentially over the past five years due to the surge in internet and smartphone users, improved policy reforms, and an increase in disposable income. Mobile wallets, Internet banking, and debit/credit cards have become popular among customers for making transactions on e-commerce platforms. India includes 780 million internet users, where an average Indian person spends around 7.3 hours per day on their smartphone, one of the highest in the world. As of 2021, there were 1.2 million daily e-commerce transactions. The total value of digital transactions stood at US$ 300 billion in 2021 and is projected to reach US$ 1 trillion by 2026. The India online grocery market size has been projected to grow from US$ 4,540 million in 2022 to US$ 76,761.0 million by 2032, at a CAGR of 32.7% through 2032. Zepto saw the highest increase in both Daily Active Users (DAUs) & Monthly Active Users (MAUs) in November 2023 at 8% & 10% respectively. India’s beauty and personal care market, presently valued at US$ 16.8 billion, is poised to grow at a compound annual rate of 11%, with cosmetics and perfumes categories growing at a faster clip.
India's economy continues to grow at the highest rate in the world, outpacing that of emerging and developing Asia and economic expectations for China. India has been ranked as the fifth-largest economy in terms of exchange rate and the third-largest economy in terms of purchasing power parity. In the fiscal year 2023, the Indian economy is expected to grow at 6.5% against 7% in 2022 and 8.7% in 2021. India’s GDP growth was projected in a range of 6-6.8% for the fiscal year 2023-24. India’s GDP per Capita reached US$ 2,850 in 2024, compared with US$ 2,610 in 2023. India’s GDP Per Capita data is updated yearly, available from March 1958 to March 2022, with an average number of US$ 323.24. India’s GDP can grow from the current US$ 3 trillion to US$ 9 trillion by 2030, and US$ 40 trillion by 2047, if the country’s working-age population — which is expected to increase by over 100 million people between 2020-30, is productively employed.
The governments’ incentives and the FDI funds have helped the FMCG sector strengthen employment, establish a more robust supply chain, and capture high visibility for FMCG brands across established retail markets. In December 2022, Hindustan Unilever Limited announced its foray into the ‘Health & Wellbeing’ category through strategic investments in Zywie Ventures Private Limited (“OZiva”) and Nutritionalab Private Limited (“Wellbeing Nutrition”). In October 2022, Dabur India Limited announced the acquisition of a 51% stake in Badshah Masala Private Limited for Rs. 587.52 crore (US$ 71 million). In 2021, Britannia Industries planned to invest Rs. 94 crore (US$ 11.3 million) to add two new manufacturing lines that will increase its capacity by 85% from the current 35,000 metric tonnes to 65,000 metric tonnes per annum.
Fast-moving consumer goods (FMCG) is the fourth-largest sector in the Indian economy. There are three main segments in the sector food and beverages, which accounts for 19% of the sector; healthcare, which accounts for 31% of the share; and household and personal care, which accounts for the remaining 50% share. The urban segment contributes to about 65% of the revenue share, while the rural segment accounts for 35%. The rise in rural consumption will drive the FMCG market. The Indian processed food market is projected to expand to US$ 470 billion by 2025.
Final consumption expenditure increased at a CAGR of 8.8% during 2015-22.
The India online grocery market size was projected to grow from US$ 4,540 million in 2022 to US$ 76,761.0 million by 2032, at a CAGR of 32.7% through 2032. By 2030, it is expected to have an annual gross merchandise value of US$ 350 billion.
The FMCG sector has received good investments and support from the Government in the recent past. Union Budget 2023-24 has allocated US$ 976 million for PLI schemes that aims to reduce import costs, improve the cost competitiveness of domestically produced goods, increase domestic capacity, and promote exports. In 2021-22, the government approved the Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) with an outlay of Rs. 10,900 crore (US$ 1.4 billion) to help Indian brands of food products in the international markets.
In Q3, FY23, the FMCG sector clocked a value growth of 9.0% Y-o-Y — lower than the 9.2% Y-o-Y value growth seen in Q3 FY22.
According to NielsenIQ’s report, in 2024, the FMCG industry in India is expected to grow between 4.5-6.5%, owing to strength in the sector and Indian economy.
In October 2022, Dabur acquired a 51% stake in Badshah Masala Private Limited for Rs. 587.52 crore (US$ 71.81 million) less proportionate debt as on the closing date, with the Badshah enterprise being valued at Rs. 1,152 crore (US$ 140.81 million).
The outlook of the FMCG sector looks on track with the pandemic easing out. Rural consumption has increased, led by a combination of increasing income and higher aspiration levels. There is an increased demand for branded products in rural India. On the other hand, with the share of the unorganised market in the FMCG sector falling, the organised sector growth is expected to rise with an increased level of brand consciousness, augmented by the growth in modern retail. The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220 billion by 2025, from US$ 110 billion in 2020.
