Rising Urban Consumption Fails to Boost Market Share for Major FMCG Firms, Says Kantar Executive

Urban consumption in India is on the rise, but listed fast-moving consumer goods (FMCG) companies are struggling to keep up, losing market share to smaller, unbranded players. K Ramakrishnan, Managing Director - South Asia at Kantar’s Worldpanel division, highlighted this trend, indicating that while overall consumption is improving, it hasn't translated into gains for the larger, listed firms.

Key Developments

• Ramakrishnan noted that rural demand is seeing a boost due to broader economic factors, which could shift the market dynamics.
• He mentioned that most policy inputs are already in place, and the next phase will depend on consumer responses over time.
• Consumption sentiment in India improved in the third quarter, largely due to recent government actions, but the actual impact on FMCG buying remains gradual.
• The sentiment turned positive following changes in taxation and the goods and services tax (GST) during the festive period, although the pricing impact is still slowly moving through the supply chain.

Business Impact This situation suggests that while urban consumers are spending more, the larger FMCG companies may need to rethink their strategies to regain market share. The gradual improvement in sentiment could eventually benefit these firms if they adapt effectively.

Market Context The FMCG sector's growth has risen from around 3.75% to 4.2% earlier this year, indicating a positive trend, but the competition from smaller players remains a significant challenge.

Industry Context Kantar’s household-level data shows that FMCG volumes have picked up since September, reflecting a potential recovery in consumer spending. However, the competitive landscape is shifting, and larger companies must innovate to stay relevant.

Looking Ahead It'll be interesting to see how these trends evolve and whether the larger FMCG companies can adapt to the changing market dynamics.