NEW DELHI (Commodity Online): The performance of the India's Fast Moving Consumer Goods industry (FMCG) is likely to slowdown in the 2012 as they plans to increase cost of regular products like biscuits, coffee, tea, toiletries and personal care items by about 10% and more by first quarter (Q1) of the fiscal 2012-13(FY13).
“Input cost inflation, persistent rise in raw material price, rising fuel costs, fluctuation in the currency, dipping industrial growth, slowing global economy together with an overall moderating consumer sentiment might lead to a slow volume growth of FMCG segment in 2012,” said Mr D.S. Rawat, secretary general of The Associated Chambers of Commerce and Industry of India (ASSOCHAM) while releasing the chamber’s analysis titled FMCG Sector: An Outlook for 2012.
According to Rawat, all of these factors might pinch the FMCG industry which will go for a fresh round of price hikes as we usher in the New Yearand the sector might take a hit of about 10 to 15% in sales including the semi-urban and rural market as the burden might be shifted to the price-conscious end consumers or else companies will have to opt for down trading.
Reserve Bank of India (RBI) may go in for a reduction in interest rates to boost the sagging economy, improve demand momentum and investment climate on seeing the emerging market scenario and overall macro-economic expectations.
ASSOCHAM interacted with 100 industry experts, analysts, economists and FMCG companies.Their views are below:-
- FMCG companies are showing signs of consolidation and might not be able to sustain the strong volume and sales growth momentum in the next two to three quarters.
- Majority feels that weakening rupee against the dollar and the imported inflation is considered the primary reason that might hamper the growth of FMCG.
- Soaring inflation and rising interest rates have been adversely impacting the margins of FMCG companies.
- Interest rates and inflation will abate gradually and the growth will continue despite certain hiccups.
- Industry will rebound after the last quarter of the current financial year.
