Urban Demand Revival: A Distant Hope for FMCG Sector

As the FMCG industry grapples with a sluggish urban demand, companies are turning towards premiumisation to fuel growth. With consumers in bigger cities seeking high-quality products and convenience, this strategy is seen as a beacon of hope amidst the prevailing consumption slowdown.

Premiumisation: The New Growth Engine

Industry leaders like Dabur India and Zydus Wellness are betting big on premium and value-up offerings to drive growth in 2025. Despite inflationary pressures, the trend towards premiumisation is expected to continue, with certain categories possibly seeing a trading down effect.

Changing Consumer Preferences

Categories such as liquid beauty, western snacks, and instant coffee are gaining traction among households, signaling a shift towards premium categories. However, the overall growth of the FMCG sector remains tepid, with recent data indicating a slowdown compared to previous quarters.

Rural Recovery vs. Urban Slump

While rural regions show signs of recovery, thanks to a bountiful monsoon, urban areas continue to struggle with high inflation and reduced discretionary spending. The disparity in consumption levels between urban and rural areas is stark, with urban consumption hitting a two-year low.

Looking Ahead: The Road to Recovery

Industry experts predict a steady recovery starting mid-2025, driven by consumer preference for high-quality and health-conscious products. However, without significant relief from inflation or government intervention, achieving a substantial improvement in mass consumption remains a formidable challenge.