Fast Moving Consumer Goods (FMCG) companies in India are facing a tough financial phase, as high production costs and food inflation have squeezed their profit margins in the July-September quarter.
Major players including Hindustan Unilever Limited (HUL), Godrej Consumer Products Limited (GCPL), Marico, ITC and Tata Consumer Products Limited (TCPL) are now considering a hike in product prices to offset rising expenses on raw materials such as palm oil, coffee and cocoa.
One of the biggest challenges for these companies is the decline in urban consumption, which traditionally accounts for about 65-68 per cent of FMCG sales. Meanwhile, rural markets have shown more resilience, maintaining steady growth despite economic pressures. GCPL CEO Sudhir Sitapati mentioned in the company's quarterly results that they consider these issues to be temporary and plan to handle costs strategically while cautiously increasing prices to recover margins.
Despite market challenges, GCPL's key brands—such as Cinthol, Godrej No.1 and HIT—reported stable performance during the quarter. Similarly, Dabur India, known for products such as Dabur Chyawanprash, Pudina Green and Real Juice, reported a 17.65 per cent drop in profit, pulling it to Rs 417.52 crore, while revenue fell 5.46 per cent to Rs 3,028.59 crore. Nestle India Chairman Suresh Narayanan highlighted that rising prices of fruits, vegetables and oils are putting pressure on household budgets, impacting spending on mid-range products. Despite this, Nestle's domestic sales saw a growth of 1.2 per cent.
Both TCPL CEO Sunil D'Souza and HUL CEO Rohit Jawa noted weak consumer spending in urban areas, but rural areas continued to perform strongly, helping offset some of the losses in urban markets.
