India’s retail sector is showing signs of a robust rebound, with growth expected to accelerate from the current 5% to 9–10%, according to the Retailers Association of India. Rising consumer confidence, steady regional demand, and a stable market outlook are supporting this upward trajectory. Meanwhile, the FMCG sector continues to deliver mixed signals.
Retail inflation is projected to ease to 2.5% or below in June, helped by favourable monsoons and base effects. However, seasonal pressures—like a rise in tomato prices—may create temporary spikes in July. The FMCG industry recorded an 11% value growth in Q4, largely driven by increased edible oil prices and smaller pack consumption, indicating cautious spending patterns despite easing inflation.
Indian consumer goods are gaining international appeal. HUL, ITC, and Dabur have reported faster export growth than domestic sales, with items like biscuits, shampoos, and poha finding favour overseas. Backed by the PLI scheme and the global love for Indian cuisine, FMCG exports could see a 50–80% rise this year.
Yet, Q1 earnings updates suggest that unseasonal rains and higher input costs have impacted topline performance for FMCG players. While urban demand shows signs of recovery, margins remain under pressure for companies like Dabur, Marico, and GCPL.
Finally, Reliance is spinning off its consumer goods business into a separate entity to attract focused investment. This new unit will house its growing portfolio of homegrown brands, further intensifying competition in India’s dynamic FMCG landscape.
Click on the headings below for insights on how these trends are shaping India’s retail landscape…
1. Indian Retail Sector Set to Accelerate from 5 pc to 9–10 pc Growth
The Indian retail sector, currently valued at $900 billion, is demonstrating strong signs of recovery and renewed momentum. Following a year of subdued growth, the industry is now poised for a faster growth trajectory, buoyed by stabilizing markets, rising consumer confidence, and robust regional demand.
2. Retail inflation seen at 2.5% or lower in June: BoB Report
With good rains across the country and thanks to the base effect, retail inflation is seen to remain benign at 2.5% or less in June, but seasonal pressures are cropping up. Prices of kitchen staples such as tomatoes are beginning to see a spike, which could put pressure on retail inflation in July.
3. India's FMCG industry clocks 11% growth in March quarter on higher edible oil prices
The Indian fast-moving consumer goods (FMCG) industry reported 11% year-on-year value growth in the March quarter, driven by a 5.1% volume increase and a 5.6% price hike, according to NielsenIQ. While overall inflation is easing, high edible oil prices are keeping the basket of staples expensive, resulting in higher value growth. But higher unit growth compared to volume growth suggests consumers are choosing smaller pack sizes.
Indian-made consumer goods like biscuits, noodles, and soaps are rapidly gaining traction in global markets, with companies like HUL, ITC, and Dabur reporting faster export growth than domestic sales. This surge is driven by the popularity of Indian cuisine and supported by government initiatives like the PLI scheme, potentially boosting exports by 50-80% this fiscal year.
Topline growth of India’s fast-moving consumer goods (FMCG) players is expected to remain subdued in the June quarter due to macro headwinds including unseasonal rains, a truncated summer season and input cost inflation, companies said in their quarterly updates on Friday. While sequential demand recovery was visible — particularly in urban markets — earnings remained under pressure across the board.
6. Ambani's Reliance to spin off India consumer goods business into new unit
Indian billionaire Mukesh Ambani's Reliance Industries said it will spin off its consumer goods unit into a new entity to allow the fast-growing business to attract investors beyond those backing its retail unit. Reliance's consumer business includes brands such as Campa Cola, which competes with Coca-Cola and Pepsi, and dozens of other snacks and confectionery brands that fight for shelf space with the likes of Mondelez's Cadbury chocolates.
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