Nestlé India chairman and managing director Suresh Narayanan briefed media persons on the mounting challenges to the FMCG sector, particularly in metropolitan regions, at a recent briefing. This report came a day after the company said its consolidated net profit had registered a 0.9% year-on-year decline at ₹899 crore for the second quarter of the 2024-25 financial year.
Narayanan emphasized the fact that urban centers are now the pressure points for the FMCG market, inasmuch as although demand in rural areas remains relatively stable, major cities are under a lot of economic stress. He pointed out that growth in the food and beverages sector, which earlier enjoyed double-digit expansion, has now cut down to a mere 1.5-2%. “It feels like we are working in two different Indias,” he said, commenting on the contrast of booming urban economies and stagnating rural ones.
Other industry players, such as Parle, Dabur, and Tata Consumer Products, have all echoed the sentiments above in relation to their recently reported quarterly performances due to specific pressures from the sector arising in urban demand.
The milk and nutrition segments and the chocolate and confectionery categories were seriously dented. While KitKat had high single-digit growth, Munch has ferocious regional competition. Narayanan mentioned the weak demand with soaring food inflation that has now moved into alarming territory. He noted that, in such a situation, rising commodity prices-coffee and cocoa have surged by 60% and 150%, respectively, from a year ago-could make further price increases inevitable.
Yet, he said, immediate price hikes were off the agenda. Narayanan sounded optimistic that stabilization of prices for commodities such as milk and packaging materials would enable the company to focus on volume growth without antagonizing consumers with higher costs.
With the finance and industry ministry pushing for a stimulus package, Narayanan said that if good monsoon conditions were to bring in better agricultural incomes, a rebound could be seen. As cities begin to stabilize, along with rural upliftment, we can look forward to seeing a road to recovery for the FMCG sector, he concluded.
Not only does Nestle India focus on the dynamics of the market, but the company has recently added a ‘no refined sugar’ version of its Cerelac baby food range to add another product to its portfolio, considering changing consumer preferences and higher health consciousness.
