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India’s consumer packaged goods sector saw balanced growth in 2023: Report

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75 per cent of global growth was due to price increases in 2023

New Delhi: India’s consumer packaged goods (CPG) sector had a balanced growth in 2023, where retail sales value increased with volume gains, a global management consulting firm said in a report.

Bain & Company’s first annual Consumer Products Report said 75 per cent of global growth was due to price increases in 2023. However, India was among few markets where, despite inflation, the sector had gains in volume.

The report, based on a survey of more than 120 consumer product company executives around the world, said that emerging markets are “offering the most opportunity for volume growth in 2024”.

It said, emerging markets accounted for the vast majority of global volume gains.

“India was a standout example of balanced growth, with RSV (retail sales value) advancing by nearly 15 per cent since 2022, aided by consumers switching from local or unbranded products to bigger, international brands,” it said.

Volume and pricing were both under pressure in China, amid low consumer confidence, it said.

The consumer product sector has enjoyed a year of tremendous growth, with RSV for the industry globally rising by close to 10 per cent year over year in 2023.

“While that surge is nearly double the 10-year average growth rate, three-quarters of it is likely due to price increases rather than volume gains. In the US and Europe, price increases accounted for 95 per cent of RSV growth,” it said.

The report further said that imbalance is not sustainable, and emerging markets will be key to driving profitable, volume-driven growth for consumer packaged goods in the years ahead.

While leading CPGs have increased prices by more than 20 per cent on average since the third quarter of 2021, that has been blunted by similar growth in the cost of goods sold.

“For top CPGs, the average EBIT margin remains near a 10-year low, and retailers have been looking to share their own margin pain with CPGs,” it said.

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