Online platforms account for 17% of overall FMCG consumption: Deloitte-FICCI report

The Fast-Moving Consumer Goods (FMCG) industry, the fourth largest sector in the Indian economy plays a crucial role in the country's economic prosperity. 

FMCG companies have navigated through uncertainties to achieve double-digit value growth, peaking at 12.2 percent year-on-year in CY Q2 2023, according to Deloitte-FICCI Report 2024.

“However, signs of distress began to appear as volume growth lagged and remained in the red before only picking up in 2023. As volume growth begins to align with value growth, an evolving consumer dynamic that is likely to shape FMCG growth strategies is manifesting,” the report said.

The report, unveiled today, highlights the transformative trends shaping the FMCG industry and underscores the need for companies to adapt and innovate to cater to the evolving Indian consumer. Here are some of the insights:

Consumer behaviour and demand trends

Consumers in India are increasingly turning to e-commerce as a preferred channel for purchasing FMCG products. With internet penetration rapidly expanding—projected to reach 907 million users by 2023—online platforms now account for 17 percent of overall FMCG consumption, particularly among affluent and evolved buyers.

Additionally, quick commerce gained momentum during the pandemic and has rapidly become a preferred channel for urban consumers. In FY24, leading FMCG firms reported a nearly 2x increase in the share of quick commerce within their total e-commerce sales, reaching around 35 percent of online sales. This surge in quick commerce is anticipated to continue as consumers want to continue to purchase from Q-commerce channels.

Despite urban markets contributing around 65 percent of the overall FMCG revenue, the rural market remains a critical focus due to the stark discrepancy between its urban share of India’s population and its lower contribution to revenue. This gap underscores the untapped potential in rural regions, where increasing disposable incomes and improved distribution channels could drive high-value purchases. 

Digital transformation is no longer a choice but a necessity for FMCG companies seeking to stay competitive in an increasingly tech-driven world.

From streamlining operations to engaging with consumers in real time, digital investments are reshaping how companies operate. In FY 2024, most companies intensified their focus on end-to-end digitisation to boost efficiency and enhance consumer experiences, mentioned the report. 

Looking ahead, FMCG companies must continue localising their marketing strategies and focusing on price-sensitive offerings to maintain growth in rural markets, especially as economic challenges in these regions persist. 

India is expected to be the world’s third-largest consumer market by 2030. India’s FMCG market continues to grow as more individuals advance economically, making the benefits of progress accessible to a wider population, states the report.