FMCG Firms Expected to Show Mid-to-Double Digit Q3 Growth as Volumes Rebound
Key Points Impacting FMCG Growth
– Revenue Growth: FMCG companies are projected to achieve mid-single-digit to low-double-digit revenue growth for the December quarter. This is primarily driven by a recovery in volumes, reduction in GST-related disruptions, and stable pricing strategies.
– Commodity Trends: Favorable trends in key commodities such as crude derivatives, palm oil, and packaging materials are anticipated to support gross margin expansion.
– Rural Demand & Premiumisation: Resilient rural demand, coupled with an emphasis on premiumisation within product portfolios, continues to be the main growth engine.
Company Insights
– ITC: Expected to show significant improvement in both revenue and profit, primarily fueled by a strong performance in the cigarette sector, which is projected to grow by 6-7%. Other FMCG and agri-business segments are also contributing, with the FMCG segment likely to see around 9% revenue growth owing to stable raw materials and operational efficiencies.
– Hindustan Unilever (HUL): Faced challenges from GST-related disruptions affecting nearly 40% of its products in the first half of the quarter, with recovery seen in the latter half. Anticipated underlying volume growth is around 2-3%, along with low single-digit price growth. Home and personal care categories may witness gradual recovery, particularly in beauty and wellness segments.
– Nestle India: Anticipated to achieve double-digit revenue growth fueled by steady domestic volumes and a return to normalcy post-GST disruptions. Most product categories are expected to maintain double-digit growth, although elevated milk and coffee prices may slightly compress gross margins.
– Tata Consumer Products: Positioned for a strong quarter with widespread growth across various categories. Domestic tea volumes are predicted to inch up due to price reductions, while the salt portfolio is likely to maintain solid volume growth.
– Britannia Industries: Set to recover after previous disruptions, with biscuit volumes anticipated to grow in mid-single digits due to improved distribution and reduced raw material prices.
– Varun Beverages: Expected to close out the calendar year positively, driven by robust seasonal demand and improved volumes in both domestic and international markets. Consolidated volume growth is projected to be in the high single digits.
Conclusion
FMCG firms are positioned for impressive mid-to-high double-digit growth in Q3, bolstered by recovering volumes and favorable commodity trends. Rural demand and premiumisation strategies remain pivotal in this journey toward sustainable revenue growth. As these trends unfold, stakeholders can anticipate a flourishing FMCG landscape characterized by resilience and adaptability.