FMCG, Consumer Durables Set to Shine: Industry Revenue to Reach $615.87 Bn by 2027

India’s fast-moving consumer goods (FMCG) and consumer durables sectors show signs of a positive turnaround. A recent report by ShriRam Mutual Fund paints an encouraging picture, especially for the first half of the financial year 2025-26 (H1FY26). After a period of mixed performance, both sectors are expected to benefit from favorable market conditions, rural demand recovery, and stable inflation levels. Source: Economic Times

The FMCG sector, which includes everyday essential goods like food, beverages, personal care, and household products, is a reliable indicator of broader consumer sentiment in India. Likewise, the consumer durables segment, which covers air conditioners, refrigerators, fans, and other home appliances, is being boosted by changing weather patterns and increasing demand for premium products.

Consumer-Driven Expansion & Price-Led Growth

Before diving into more details, let’s look at some statistics. As of 2023, the FMCG market reached a size of US$167 billion. The industry is expected to grow at a CAGR of 27.9% from 2021 to 2027, with total revenues projected to hit US$615.87 billion by 2027.

Growth Trends & Quarterly Performance

• The FMCG sector recorded a 10.6% growth in sales value from October to December 2024, the highest quarterly increase in the past year. This growth was driven by price hikes and festive demand. During the same quarter in 2023, the sector grew 6.4% by volume, indicating a broad-based consumption recovery. In FY23, the industry reported 8.5% revenue growth and 2.5% volume growth, reflecting resilience amid inflationary pressures.
  
• Rural India has seen a 60% rise in FMCG basket size, increasing from 5.8 in 2022 to 9.3 in 2024 — a clear signal of growing demand and purchasing power in these areas. In 2022, the urban market contributed 65% to the overall FMCG sales, while the rural segment accounted for over 35%. Source: IBEF.org

Rural Revival & Easing Inflation to Drive Growth

According to the report, the improvement will likely be driven by a revival in rural consumption, cooling inflation, and manufacturers’ supportive pricing strategies.

The past few quarters have seen moderate growth in FMCG, especially in rural areas, contributing a significant portion of the overall demand. However, rural consumers were cautious about spending due to higher inflation and weaker income growth. With inflation showing signs of easing and rural employment schemes regaining pace, demand in the countryside is projected to improve in the months ahead. Source: Economic Times

Premium Cooling Products Lead the Way

The consumer durable sector also shows strength, although it comes with challenges. Rising temperatures across the country have increased demand for cooling appliances like air conditioners and fans. This seasonal temperature spike encourages sales of premium products, especially from brands with a strong presence in these categories.

The report indicates positive momentum in the Electrical Consumer Durables (ECD) and Room Air Conditioner (RAC) segments. However, challenges such as high raw material costs and limited pricing flexibility put pressure on company margins. Consumers are still price-sensitive, and companies may struggle to directly pass on the increased costs.

Another factor affecting sales is the delayed onset of summer in southern India, which temporarily impacted the demand for cooling appliances. However, this was balanced by stronger demand in northern regions, where temperatures spiked earlier than expected. Source: Economic Times

Equity Market Volatility Remains a Concern

While the underlying sectors show promise, the broader equity market is volatile. The report highlighted that global concerns, particularly around trade tensions and tariff wars, especially involving the United States, have led to uncertainty in stock markets. These developments have sparked jitters in financial markets worldwide, affecting investor sentiment and short-term movement in domestic equity indices.

Despite the concerns, the FMCG and consumer durable indices showed notable gains in the past month. This indicates that investors continue to have faith in India’s long-term consumption story.

Stock Performance

In the last month, the Nifty FMCG index rose by 5.33%, and the Nifty Consumer Durables index increased by 4.06%. These gains reflect growing optimism about domestic consumption, which is being supported by stable raw material costs, festive season demand, and hopes of rural recovery.

However, growth has been more modest over a three-month period. Nifty Consumer Durables was up only 1.09%, while Nifty FMCG gained just 1.60%. This suggests that investors await concrete signs of a broader rural revival while the market is cautiously optimistic before making aggressive bets.

Consumer Durables Outshine FMCG

Both indices have seen a decline over a six-month window, highlighting the impact of macroeconomic challenges like high interest rates and inflation. Nifty FMCG fell by 5.53%, and Nifty Consumer Durables declined by 6.30%. These trends show inflationary pressures and borrowing costs have impacted consumer spending across sectors.

However, over a 12-month period, the Nifty Consumer Durables index has outperformed FMCG, registering a gain of 7.13% compared to FMCG’s 4.06% increase. This trend underlines that consumers prioritize purchases of essential and lifestyle-enhancing products, especially in premium categories. Source: Economic Times

The long-term performance also indicates that investors may see better growth potential in the consumer durables space, especially if demand for home appliances and electrical products continues to rise.

Positive Momentum with a Few Challenges

Overall, the report presents a balanced but optimistic view of both sectors. The FMCG industry will likely benefit from a favorable mix of low inflation, rural income recovery, and strategic pricing. This makes it one of the key sectors to watch in FY26, especially in the first half.

The consumer durables sector, on the other hand, is driven by seasonal trends, urban lifestyle shifts, and product premiumization. However, companies must manage cost pressures effectively and adjust to changing climatic patterns and regional demand variations.

Short-term fluctuations driven by global factors are expected to persist on the stock market front. Investors should keep a long-term perspective, focusing on fundamentals rather than reacting to day-to-day market noise.

Building Resilience for Sustainable Growth

As the FMCG sector evolves, resilience will play a key role across manufacturing, supply chains, retail, and customer communication. Companies will likely focus on improving logistics, streamlining operations, gaining deeper consumer insights, launching innovative products, and adopting flexible retail strategies. These steps will help brands stay strong during market ups and downs and continue to provide value to Indian consumers.

While FMCG products offer steady demand due to daily use, consumer durables present long-term growth driven by innovation and changing lifestyles. As India enters a new phase of economic recovery, investors and businesses should closely follow these evolving trends to maximize future opportunities.

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