The fast-moving consumer goods (FMCG) sector has faced a challenging period, with top-listed companies like HUL, Marico, and Britannia experiencing a decline in both mass and premium consumer segments. Several factors, including macroeconomic conditions and changing consumer preferences, have contributed to this trend.
Downtrading and Emergence of Regional Brands
One significant trend is the emergence of small and regional players offering competitive prices. As commodity prices decreased last year, these brands attracted downtrading customers seeking affordability. This shift has been particularly noticeable in product categories like hand wash, body wash, shampoos, floor cleaners, and cooking oils.
Market Share Losses and Competition
According to a report by ICICI Securities, listed FMCG companies have underperformed due to increased competition from both mass-market players and premium global brands. Price wars among mass-market brands have led to market share losses for established players.
Impact on Premium Categories
The premium segment, however, has seen growth driven by unlisted multinational companies (MNCs) with premium portfolios and digital-first brands, especially in beauty and personal care. These competitors have successfully captured market share from listed players in the premium segment.
Revenue Growth Disparities
The revenue growth of listed FMCG companies has lagged behind that of unlisted peers in the consumer staples sector. Unlisted companies like Kellogg’s, Hershey’s, and L’Oreal have seen faster growth rates compared to their listed counterparts like ITC, HUL, and Nestle.
Challenges in Home and Personal Care
Listed companies have faced challenges in the home and personal care (HPC) segment, with slower revenue growth attributed to competitive pressures. In contrast, food and beverage (F&B) categories have performed relatively better, driven by distribution strategies and market focus.
Price Corrections and Future Outlook
FMCG players have been adjusting their pricing strategies and intensifying competition against regional brands. Analysts predict that listed companies will gradually regain growth momentum as input cost benefits are passed on to consumers.
In conclusion, FMCG majors are navigating a complex landscape marked by evolving consumer preferences, competitive pressures, and distribution challenges. Adaptation and strategic pricing adjustments will be crucial for sustained growth in this dynamic market.
