India's shrinking market and declining rupee affecting FMCG market
The volumes for fast moving consumer goods manufacturers are expected to decline in the third quarter in a row as the economic slowdown and high inflation continue to weaken consumer demand. The decline in discretionary consumption and lower demand for premium products as growth slows down in urban areas where these companies have an established presence. A number of these large companies have posted single digit growth for the year.
Raw materials no longer come at low cost. This is due to the recent depreciation in the value of the Indian rupee, which caused raw material costs have increased recently. Industry leaders like Hindustan Unilever and ITC have placed the additional costs on its products, increasing the prices. Another factor is the market competition, which has made many companies wary of the available market share, especially with the entry of new market players.
In order to maintain market visibility, many companies have been forced to increase their advertising expenses. The problem is despite great efforts, the prevailing market conditions have dampened any sort of headway for greater growth in the Indian consumer market.