Within the beauty and personal care sector, L’Oreal and Unilever were two major FMCG multinationals to report slower growth at the end of March, compared to the same period the previous year.
A depreciating local currency, higher input costs for brands, and rising domestic competition have been pulled up as the key factors behind the reduced consumer demand.
Not picking up
Although 2013 as a whole saw reduced growth on the preceding year, being that it was measured against the fairly high growth of the year before, industry players had hoped for an upturn in market fortunes for 2014.
Yet the latest results have disappointed those expectations, with the downturn persisting.
"What we were experiencing in terms of the FMCG market growth slowing down has continued this quarter, both in terms of volume and value," Sridhar Ramamurthy, Hindustan Unilever's CFO, noted on the company’s quarterly results.
"Premium segment and discretionary categories were really under pressure. The markets are still growing, but the pace of growth is slow," he confirmed.
The overall FMCG growth has come down to 6% in the quarter ended March from 18% a year earlier, cooling brands’ expectations for a strong 2014 from the off.
It’s certainly not all bad news for the industry though; India’s growth is still ahead of that in more developed markets, with the beauty and cosmetics sector currently estimated at $950 million, and predicted to grow to $2.68 billion by the year 2020 according to 'International Beauty Mart' (IBM).
Although slowing, the FMCG market is set to continue on its upward trend according to a study titled "Prospects in the FMCG sector," recently made public by the Associated Chambers of Commerce and Industry of India.
The report predicts that the FMCG sector will witness more than 50% growth in rural and semi-urban India by the end of 2014.