FMCG Giants Battle Inflation: Margins & Profits Contract Amid Rising Costs
Fast-moving consumer goods companies are experiencing a contraction in their gross margins and flat operating profits due to inflation and rising input costs. Urban consumption is declining, but rural markets show resilience. Price adjustments and efficiency initiatives are being employed to manage inflationary pressures.

- Country:
- India
Faced with inflation and soaring input costs, fast-moving consumer goods (FMCG) companies are bracing for a contraction in gross margins and a stagnant operating profit for the October-December quarter. The sector, grappling with pricing strategies, anticipates a low single-digit revenue rise, emphasizing value-driven growth.
Companies like Dabur and Marico have already experienced inflationary pressures, resulting in tactical price hikes and cost-efficiency measures. While urban markets struggle with reduced consumption and high food inflation, the rural market, accounting for more than one-third of the FMCG sector, continues to grow strongly.
Despite these challenges, alternative sales channels such as modern trade and e-commerce flourish, while traditional kirana stores face setbacks. Analysts expect these dynamics to persist, with upcoming harvest seasons providing potential relief in agricultural commodity prices.
(With inputs from agencies.)