The analysis comes even as fastmoving consumer goods (FMCG) companies predict demand to remain resilient after a quarter in which it held up, though they remain cautious about the impact of the war in West Asia.
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ET BureauVolume growth slows in urban markets, but picks up pace in rural India
FMCG volumes rose 5.2% in the April-June period, outpacing the 3.6% growth in the same period last year but missing the 5.4% expansion recorded the previous three months, according to Worldpanel by Numerator, formerly Kantar.
The sequential slowdown signalled some loss of momentum, which could reflect in the July-September quarter as well.
Industry executives acknowledged the uncertainties, but said demand remained robust.
Marico, which owns brands such as Parachute and Saffola, expects the volume trajectory to remain strong. The outlook though is conditional on the absence of further shocks. “I think if there are no more black swans, if there is a speedy resolution to the (West Asia) situation, it should be okay,” managing director and chief executive Saugata Gupta told ET. “We believe that a high single digit volume work is very much sustainable, and may even attempt double-digit growth in some of the coming quarters.”
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Consumption Trends Stable
The data show the slowdown has so far been more pronounced in urban India, where volume growth eased to 5.2% from 6.4% in the previous quarter. Rural growth accelerated to 5.3% from 4.4%, but the impact of weak rains is expected to be higher on the rural market.
“The uncertainty has not gone away,” said Manoj Menon, director, commercial, at Worldpanel by Numerator, South Asia. “The slowdown from Q1’26 to now is perhaps reflective of the caution that has been building in the market as a result,” he told ET.
The comment comes after FMCG companies in their earnings calls earlier this quarter said consumption trends remained stable.
“The FMCG demand environment remained stable during the quarter, reflecting the underlying strength of consumption,” Hindustan Unilever chief Priya Nair said during the company’s analyst call. Both rural and urban demand remained robust for the company, she said.
“There was apprehension earlier that there could be inflation-led impact on FMCG demand, but we are not seeing that at all. The consumption continues to be strong,” HUL finance chief Niranjan Gupta said, maintaining the company’s guidance for FY27 to be stronger than FY26.
The rural resilience that companies highlighted during the calls could be tested as the impact of delayed and uneven rainfall feeds through to spending.
The India Meteorological Department expects below-normal rainfall across the country over the two weeks through September 2. The rain deficit this monsoon season was 13% compared with the long-period average as of August 19. Rainfall activity is expected to remain subdued across large parts of the country, particularly peninsular India, even as some central, eastern and northeastern regions receive normal to above-normal rain.
“With the effects of delayed and lesser rainfall still to be seen, FMCG is still not out of the woods,” Menon said. The damping factor, especially in rural consumption, will only be visible from the current quarter, he said.