FMCG companies see steady demand recovery, strong growth in food biz

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• Consumer companies saw strong demand and double-digit FMCG growth in December.
• Lower inflation and GST rates are expected to boost demand and operating profits
• Rural demand outperformed urban, with strong growth in hair oils and oral care

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Leading FMCG players Marico, Dabur and AWL Agri Business saw a steady demand growth in the December quarter on strong winter push, stable raw material costs and normalisation of GST transition, quarterly updates shared by these firms show.

The foods and fast-moving consumer products (FMCG) portfolio saw a double-digit growth, as more consumers moved to branded names after the revision in the goods and services tax made them more affordable.

The companies expect to achieve better operating profits in the coming quarters on favourable macroeconomic indicators.

"Favourable macroeconomic conditions and recent tax reforms are expected to support a sustained recovery in demand and improvement in revenue trajectory in the coming quarters," Dabur said in its quarterly update on January 5.

Branded products in demand

From a household consumption perspective, FMCG volume growth of around 5 percent appears achievable within the first few months of the next fiscal, according to Worldpanel by Numerator, a global consumer data company. With low core and food inflation, analysts expect manufacturers to pass on the benefits to shoppers, stimulating demand.

As prices ease, consumers are likely to increase shopping trips, albeit marginally. At the same time, they are expected to continue trading up to more premium categories and brands.

With the price gap between branded and unbranded products narrowing post-GST, branded offerings are likely to match or even outpace the growth of unbranded goods, according to the Worldpanel report from December.

"We remain optimistic about a gradual improvement in consumption in the quarters ahead, supported by easing inflation, lower GST rates driving affordability, Minimum Support Price (MSP) hikes, and a healthy crop sowing season,” Marico said in its quarterly update on January 2.

Marico's India unit, which represents more than 70 percent of its revenue, saw underlying volume growth in high single digits in the December quarter, a slight improvement from the previous quarter. In Q2, India volumes grew 7 percent YOY.

Consolidated revenue growth stood in the high twenties, Marico said. However, flagship coconut oil brand Parachute recorded a marginal volume decline amid high copra prices, which have corrected 30 percent from the highs.

The value-added hair oil segment reported robust growth. Marico expects the segment to maintain the double-digit growth momentum over the near and medium term.

Foods had a benign quarter and is expected to revert to accelerated growth over the next two quarters, while premium personal care (including digital-first brands) continued to scale ahead of aspirations, the FMCG company added.

Marico expects gross margins to improve in the coming quarters, driven by the lagged pass-through of lower copra costs. It sees operating profit growth touching double digits on a year-on-year basis.

Premiumisation is here to stay

The FMCG sector is not just poised for a recovery but is setting the stage for sustained, value-led growth, analysts said.

Dabur, too, is optimistic and expects consolidated revenue to grow in the mid-single digits, with operating profit and profit after tax to grow ahead of revenue.

"In the month of October 2025, distributors and retailers focused on liquidating the existing higher-priced inventory in the channel. Post-trade stabilisation, consumer sentiment improved in urban and rural areas. Rural demand continued to outperform urban demand this quarter as well," the company said.

It expects Chyawanprash sales to gain momentum in January, as a dip in temperature aids consumption. In the December quarter, Chyawanprash's primary sales were muted while secondary remained positive.

Dabur sees its home & personal care business grow in double digits on the back of strong growth in hair oils and the oral-care category. The culinary business is expected to record double-digit growth, Dabur said.

Its beverage portfolio registered market share gains, indicating sustained consumer confidence in the Real brand.

AWL Agri Business, formerly Adani Wilmar, recorded a low single-digit growth in volumes. The overall volumes were dragged by de-growth in castor and de-oiled cakes classified under the Industry Essentials segment, the company said in its quarterly update on January 5.  Growth was primarily led by an uptick in both edible oil and the food and FMCG segment, the company said.