Rural Markets Propel FMCG Growth Despite Urban Headwinds

The FMCG sector saw stronger growth in rural markets compared to urban areas in Q1, despite high input costs. Companies like Dabur and Marico anticipate future profitable expansions by focusing on moderating inflation and strategic improvements. Quick-commerce emerged as a significant growth channel, doubling sales year-on-year.

The FMCG sector recorded a healthier growth trajectory in rural areas during the March quarter, outperforming urban counterparts in terms of expansion. Market leaders such as Dabur, Marico, and AWL Agri Business reported continued pressure on profit margins due to escalating prices of key raw materials.

Traditional trade channels like Kirana shops faced challenges, while modern trade, e-commerce, and quick-commerce platforms maintained robust growth. Despite rising food inflation affecting urban demand—constituting two-thirds of overall FMCG sales—companies remain optimistic about FY'26 profitability.

Key players like Dabur noted a resilient rural market performance, with AWL witnessing increased growth in food categories particularly in rural towns. Meanwhile, Marico reported stable demand in the FMCG sector despite mixed trends across socio-economic segments in urban areas.

(With inputs from agencies.)