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Informist, Monday, Jun. 15, 2026

 

By Avishek Rakshit

 

KOLKATA – Fast moving consumer goods companies may not be able to see strong growth in summer sales despite the mercury soaring high this year during April-May as distributors refrained from stocking up products in advance on account of limited cash flows, industry officials and distributors said. 

 

The FMCG sector's value growth in Jan-Mar had accelerated to 13.1% on year and volume growth went up by 5.4% on year, according to market research firm Worldpanel by Numerator. However, the sectoral growth may freeze at this level, or may even fall in the summer months which coincide with the Apr-Jun period. As such, the FMCG sector may see a tepid start to the new financial year. 

 

For comparison, in the year ago March quarter, the FMCG sector saw a volume growth of 4.9% on year and value growth of 10.8%. In the June quarter of FY26, the sector registered a volume growth of 6% on year and value growth of 13.8%, according to market intelligence firm, NielsenIQ. 

 

Industry officials said consumer demand had been recovering sequentially in the March quarter and the price cuts induced by the reduction in Goods and Services Tax in September last year had boosted consumption in the last quarter. 

 

However, distributors noted that although there was a pick-up in consumer demand in the March quarter sequentially, mainly induced by GST cuts, the overall consumer sentiment remained tepid. After the breakout of the Iran war in March, demand conditions weakened further on-month. 

 

Although all FMCG companies have since hiked prices citing input cost pressures, industry officials said consumer demand will hold up and such hikes are most likely to get absorbed. Consumers are aware of the rise in input costs on account of the fallout of the Iran war and are cognisant of the mounting costs, industry officials said. 

 

"Prices went up in the March quarter as well in a majority of key consumer products to balance the prevalent cost pressures, but we have seen consumers absorbing the price hike then as well," an industry official said. 

 

Distributors, however, have not increased their stocks of FMCG products on account of weak cash flows. Distributors said their cash flows were already down since the December quarter on account of the then prevalent weak demand conditions and some inventory adjustments in sales channels which continued in the March quarter as well. 

 

When consumer demand started looking up in the March quarter, logistics costs increased and the price hikes taken by companies in this period had impacted consumer demand to some extent in the hinterlands, distributors said.

 

"Our employee costs have gone up after the March appraisals and logistics has also become costlier. Comparatively, our cash flow situation is not good and margins are down. So, we did not increase stocking up much products despite companies telling us that the demand in the summers is going to be good," Vivek Agarwal, director at Arihant Enterprises, which distributes personal care products in Kolkata, said. 

 

Agarwal said his employee costs have increased by 12% on year and fuel costs are up by around 3%. Comparatively, his cash flow has not risen. which prevented him from increasing his stock. 

 

Last month, Indian Oil Corp. Ltd. hiked the retail prices of fuel four times to INR 102.12 per litre for petrol and to INR 95.20 per litre for diesel in Delhi. In total, petrol prices have been hiked by INR 7.35 per litre and diesel by INR 7.53 per litre in May alone.

 

A similar view was shared by Avneet Gupta, proprietor of SL Enterprises near Haldwani in Uttarakhand. Gupta said distributors work on a cash-and-carry model. The payment to the companies needs to be made upfront for procuring the products and then the retailers also need to make upfront payments to the distributor to buy the product meant to sell to consumers. 

 

"The retailers also bought less fearing the economic fallout of the Iran war and a looming price hike in fuel. There is too much economic uncertainty at the retailers' end, which prevented us from procuring more products for the summers, after all, whom are we going to sell if demand from retailers is weak," Gupta said.

 

V.M. Shetty, proprietor of Mysore-based Shiva Shakthi Enterprises, which distributes personal care and food products, fears a weak monsoon may lower rural demand, which prevented him from increasing his inventory in the ongoing month as well. The Southwest monsoon has stalled over the Indian sub-continent, resulting in an alarming nationwide rainfall deficit of up to 64% for the early weeks of June. 

 

"There is uncertainty over the monsoon and in case there is a deficit, rural demand will not pick up. It does not make sense for me to increase my inventory as such. There is too much uncertainty and volatility now," Shetty said.

 

Industry officials are of the view that good reservoir water levels may help farmers with their harvest and help in holding up or increasing rural demand. "El Nino conditions may impact the rainfall which may have an adverse effect on the harvest and hence lower farmers' income. But if water reservoir levels are good, then it can be used for irrigation and may lower the stress on farmers," an industry official said,

 

However, according to the Central Water Commission, live water storage is currently around 52 billion cubic metres, which is just 28% of the country's water storage capacity of 183.6 billion cubic metres. Usually, a good harvest leaves farmers and the rural populace with increased money which they can spend on various items including FMCG products. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

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