Moving fast, growing slow: Story of FMCG companies in 2024

India's fast-moving consumer goods (FMCG) companies have been shunted to the slow lane owing to weakening urban demand. Gone are the sunny days of 2022 and 2023 when FMCG companies outgunned the Sensex - a proxy for Indian markets - by a wide margin. Fast-forward to today, this sector is trailing the Sensex by 10 per cent as of November 13, 2024. If that wasn't bad, the sector has redlined in the last three months, contracting 7 per cent. Dud demand So, what's dragging the FMCG sector? In short, low consumer demand. Rising food inflation and commodity prices have put a squeeze on household budgets. Although FMCG companies previously thrived despite wrestling with poor rural demand, the sudden recent slump in urban areas has been a body blow, especially as it comprises two-thirds of their total sales. In this quarter (July to September 2024) alone, urban volume growth has slowed to 2.8 per cent from 11 per cent in its year-ago period. Impact on the biggies Consider Britannia . Although the Kolkata-based company's metro category grew 15 per cent in the first three months - April, May and June - of this financial year, its biscuit has crumbled in the current quarter, growing at a measly 2 per cent. ITC's feathers have been ruffled, too. From just looking at the results, ITC seems to be in tip-top shape, but a closer study suggests otherwise. The tobacco-to-toothpaste conglomerate achieved a double-digit growth this quarter mainly due to its agriculture and hotel businesses. During the same time, its FMCG segment grew just