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FMCG companies are pinning their hopes on villages, not cities: from oil to soap to biscuits, they are winning everywhere.

Sagar Patel

By Sagar Patel

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Revenues of fast-moving consumer goods (FMCG) companies producing items such as soap, biscuits and oil may increase in this financial year. However, this will largely depend on whether demand in urban areas does not decline and weak sales of these items in rural areas improve. If this happens, the revenues of these companies may increase by 7-9 per cent in this financial year, while in the last financial year of 2024, they could only increase by around 7 per cent. This information was stated in a report by rating agency CRISIL.

The contribution of rural areas is 40%.

Rural areas contribute around 40 per cent of the total revenue of FMCG companies. Crisil Ratings director Aditya Jhawar said rural consumer volume growth is expected to be 6-7 per cent in the financial year 2025. Given the possibility of better monsoon, the performance is expected to be good. Income from agriculture will be supported by increasing the minimum support price. Along with this, the government is laying emphasis on Pradhan Mantri Awas Yojana-Rural. Increasing government spending on rural infrastructure will help increase savings in rural areas and people will be able to spend more.

That’s why this is happening

Despite weak sales in the mass segment, companies are increasingly focusing on premium products. Based on data from 77 FMCG companies, this report says that due to the increase in premium, the operating margin will increase by 50-70 basis points to 20-21%. However, this margin could have been even higher but rising sales and marketing expenses are impacting due to increased competition in the market. The FMCG sector’s revenue in the last financial year is estimated to be Rs 5.6 lakh crore.

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What does the report say?

The report says that volume growth in urban areas may be around 7-8 per cent in this financial year. This growth is possible due to the increase in disposable income of people and companies’ focus on premium products. Rabindra Verma, associate director, CRISIL Ratings, said that revenue growth of different product segments will be different. The food and beverage segment is expected to grow by 8-9 per cent this financial year, which will be helped by rural demand. At the same time, the personal care segment will grow by 6-7 per cent. The home care segment, which achieved better growth than these two segments last year, may witness 8-9 per cent growth this year.

Sagar Patel

Sagar Patel

I am Sagar Patel, specializing in business news reporting. With a keen focus on economic trends, market analysis, and corporate developments,

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