We are going through an interesting phase in the FMCG sector. One side is volume growth which is pretty impressive actually and on the other side is raw material pressure. Where is it going?
Logically both volume growth and margin growth will not sustain. One of them will have to give way to the other. Over the past two decades, this growth margin axis has been playing out in FMCG companies and I can see them sacrificing margins for growth in the current scenario.
There are several reasons for that but I feel that once we discount the post Covid upsurge in consumption, they will have to find ways of sustaining the volume growth. So, I feel pricing by consumer companies may be more benign. Companies will give more trade push just to sustain the volumes. Inflation is a serious concern but at the same time, the Covid period has also given FMCG companies a strong base through several cost cutting measures. The rationalisation of the advertising and sales promotion expenditure may hav