'FMCG sector needs to reignite volume expansion, embrace distribution innovation'

Mumbai: The FMCG sector needs to reignite volume expansion and embrace strategic innovation to maintain growth, Pidilite Managing Director Bharat Puri said on Wednesday amid the FMCG companies reportedly facing subdued growth during October and November hit by the slowdown in urban demand.

"To maintain growth, the FMCG sector must focus on reigniting volume growth and embracing strategic innovation. Companies have shown that market outperformance is possible through product and distribution innovation," said Puri at a Summit on the FMCG sector hosted by the CII here.

Noting that modern trade and quick-commerce channels are thriving, offering new growth avenues, he said insurgent brands are capturing significant growth by winning the hearts of underserved customers.

"To stay competitive, companies must innovate, invest in digital capabilities, and adopt entrepreneurial operating models, while maintaining robust data strategies for personalized engagement," Puri, who is also the chairman of the CII, FMCG National Committee, added.

The summit was attended by representatives from leading brands such as Tata Consumer Products, Britannia Industries, Pidilite Industries, Godrej Consumer, HUL, among others.

"We expect overall FMCG industry revenue growth to return to consistent lower double digit growth in over the next 3-5 years; relatively higher contribution from volume growth compared to prior years, varying across categories," said Joydeep Bhattacharya, Partner at Bain & Company.

Stating that Indian FMCG has a great potential to achieve volume growth, Sudhanshu Vats, Managing Director Designate, Pidilite Industries said, "Margin expansion is likely to continue in the days to come. There is a huge potential for brands to benefit given macro fundamentals remain very strong.”

"Modern channels are now contributing over a quarter of packaged FMCG sales in over one million towns, and growing rapidly. Shopper missions are becoming more frequent, and 60 per cent of these missions are now unplanned.

“It is an exciting time, and absolutely essential for FMCG companies to re-invent their brands, their pack price architecture, and their approach towards growth in sync with the shifting consumer and channel trends," said Ravi Swarup, Partner and Consumer Products Practice Head at Bain & Company in India.

Against the backdrop of challenging overall consumption growth in recent times, this is almost a perfect storm that presents both significant opportunities as well as a situation where prior playbooks on demand generation and fulfillment are no longer valid, he emphasized.

Vipul Parekh, Co-Founder, BigBasket, said, the rapid rise of dark stores and quick commerce is reshaping retail dynamics, creating a highly competitive and evolving market.

"Customers today are affluent yet capricious, willing to trade brand loyalty for convenience, which challenges businesses to adapt quickly. Our strategies must include defending core brands, exploring premiumization, and experimenting with formats to stay relevant to Millennials and Gen-Z, who are discovering brands through quick commerce," he said.

"Quick commerce is transforming how we connect with savvy, well-informed consumers, offering significant opportunities for ITC in premiumization, creating new categories, and delivering convenience.

“This fast-paced channel demands sharper supply chains, real-time data, and deeper collaboration with e-commerce partners to meet demand waves directly," said Sameer Satpathy, Chief Executive for Personal Care at ITC.

With partial data from quick commerce overlaid with D2C insights, "our understanding of the consumer journey is getting richer, enabling faster and more decentralized decision-making," he said.