The Rs 48,000 crore domestic FMCG industry which remained in low growth captivity of 1.5% during the last four years consecutively is all set to achieve a growth of 3-4% in 2005-06, according to a survey undertaken by the Associated Chambers of Commerce and Industry of India (Assocham).
According to Assocham president Mahendra K Sanghi, “Major products that will be moving towards registering a major recovery in terms of higher sales include biscuits, beverages, toothpastes, shampoos, washing powder, skin creams and chocolates.”
Already most of the segments have shown a growth in terms of value in October this year such as biscuits by 12.2%, beverages 7.2%, toothpastes 6.1%, skin creams 7.1% and shampoos 13.1%.
The improvement started since the third quarter of calender 2004 as the July-September quarter recorded a growth of 5.1% in value terms, the impact of which will be so influential that it will propel higher sales of aforesaid consumer goods in 2005-06, the Assocham chief pointed out.
According to the study, the prevailing competitive pricing environment has been adequately established which in turn will improve profitability margins of companies in the consumer goods segment. The turnaround in the fortunes of the FMCG industry is also reflected on account of aggressive advertising and brand promotions which will lead to higher sales and earn still higher revenues for advertisement industry to the tune of Rs 10,000 crore, the study noted.
Price war and poor monsoons were that two factors that led to the slow growth of 1.5% in the FMCG industry in the last four years, the study pointed out.
“However, there will be pick up for consumer goods industry in current fiscal which will further be strengthened in 2005-06 along with general improvements in business environment, economic activities and possible acceleration in the agricultural activities, the survey pointed out.