FMCG: Consolidating Markets

Consolidating Markets The FMCG market in India is in a state of flux. Stagnant demand and the fierce price war have eroded the bottom lines of FMCG companies. Over half of the product categories shrank in terms of market worth last year, and expansion in the rest was lower than in previous years. There was also a significant shakeup in the growth rate of individual product segments. Sales of items such as packaged teas, soaps and detergents either stagnated or declined, while those like biscuits and refined oils registered strong growth. However, overall growth in the sector was just 1.4 per cent over that of the previous year. Substantial price cuts, especially in detergents and shampoos, as well as rising raw material costs have eaten away at margins in a highly competitive market. Unbranded products are giving the big industry names a run for their money in mofussil towns and rural areas. Adding to these troubles is the easy access to cheap financing, which has diverted consumer attention to the purchase of durable goods, affecting topline growth of FMCG majors.