New Delhi, Apr 16 (KNN) Fast-moving consumer goods (FMCG) companies in India are anticipating a demand upswing in rural markets after weather agencies predicted an above-normal monsoon rainfall for 2024.

The India Meteorological Department (IMD) has forecast monsoon at 106 per cent of the long-period average, while Skymet sees it around 102 per cent.

The FMCG sector derives over a third of its sales from rural areas, which have lagged urban markets in recent years due to erratic rainfall, drought-like conditions, and high food inflation denting farm incomes.

Leading companies like Parle Products, Marico, Godrej Consumer, and Dabur expect the favourable monsoon outlook to revive rural consumption in the second half of fiscal 2024-25.

"A normal monsoon may aid rural recovery," said Parle's Krishnarao Buddha, voicing a common sentiment that robust agricultural production and higher rural incomes will reinvigorate demand for consumer packaged goods, reported FE.

However, the potential flipside is the risk of excessive rainfall causing floods that could impact the harvest and negate the perceived benefits.

Analysts highlight that the spatial and temporal distribution of monsoon rains between June and September will be crucial.

After years of rural distress constraining growth, FMCG firms are pinning hopes on a strong rural rebound to propel a consumption revival.

Sector experts note that for FMCG to log double-digit expansion, rural markets need to significantly outperform urban markets in terms of sales growth.

The upcoming monsoon could mark a turnaround for the FMCG industry's fortunes that are closely tied to rural prosperity and spending power.

(KNN Bureau)