FMCG Sector Insights: Growth, Trends and Opportunities

From your neighbourhood kirana store to flashy supermarket aisles, the Indian FMCG sector is riding a growth wave like never before. It’s not only growing but getting bigger. The sector is on an exciting ride thanks to a culmination of several factors, including government initiatives, rising income, and quick commerce growth.

FMCG Sector Growth: Bigger and Booming

The Indian FMCG industry is expected to have sustained a growth rate of 7 to 9% in 2024 . The sector is poised to grow from USD 167 billion USD in 2023 to 615 billion USD by 2027 . And the factors fuelling this growth - rising incomes, increasing urbanisation, and our ever-growing love for convenience.

Whether ready-to-eat meals, organic beauty products, or quick home deliveries, FMCG companies are ensuring we get what we want—faster and better.

Trends Shaping the Indian FMCG Sector

While the growth numbers are positive, the sector, like others, is witnessing several interesting trends. Some of them are:

• Rural India is Shopping More
  

If you thought just urban India that’s driving sales, think again. Rural consumers are stepping up their shopping game. According to a report in 2022, rural households were responsible for over 35% of India’s total FMCG sales.

Also, rural consumption of FMCG products grew more than double the pace of urban growth at 6% in the September 24 quarter. During the same quarter, urban growth stood at 2.8%.

• The Digital Boom
  

Remember the days when you had to stand in long supermarket lines? Well, digital transformation has changed the game. Online grocery shopping, subscription-based FMCG deliveries, and quick commerce are the new normal.

Big players are investing heavily in digital platforms because why should you step out when you can order everything from your home? According to estimates, 40% of all FMCG consumption in India will be made online by 2030.

• Convenience is King

We all love things that make life easier. Single-serve food packs, instant meals, travel-friendly personal care products, and everything else are designed to fit into our fast-paced lives. The FMCG sector is fast witnessing a demand for ready-to-use products, especially in urban areas, due to the rise in nuclear families.

For instance, the ready-to-eat market in India is expected to grow about 45% in the next five years.

Opportunities in the Sector

If you’re an investor, entrepreneur, or just a curious mind, the sector presents several growth opportunities. These include:

• Cashing in on Digital Transformation
  

The rapid expansion of e-commerce and quick commerce platforms is generating significant new avenues for business growth. This digital shift is compelling established companies to adapt and innovate. Major brands are demonstrating this transformation by integrating digital strategies into their core operations.

These companies are leveraging the power of technologies like Artificial Intelligence (AI) and the Internet of Things (IoT) to revolutionise their processes. This results in enhanced operational efficiencies, streamlining supply chains and optimizing logistics. A collaboration with key players to boost their digital capabilities holds promising scope for those willing to venture into the sector.

• Lowering Costs for Food Businesses
  

If you're an entrepreneur wanting to start a food business, you can set up your processing units at government-designated agro-processing units. These units have basic and core infrastructure facilities that can help you cut down plant set-up costs dramatically.

While basic facilities include roads, water supplies, power supplies, etc., core facilities include warehouses, cold storage, etc.

Conclusion

The Indian FMCG sector isn’t just growing. It’s transforming at lightning speed. With rural markets booming, digital platforms taking over, and convenience becoming the ultimate selling point, the industry is on an exciting ride.