Year Ender: Top Trends That Dominated FMCG In 2023 The major FMCG trends that were a changemaker in 2023involve digitization, rural recovery, sustainable product development and growth of non-food category.

Keeping up with consumer behavior, the Fast-Moving Consumer Goods (FMCG), is undergoing a significant transformation. The major FMCG trends that address these changes involve digitization, rural recovery, sustainable product development and packaging and growth of non-food category.

Digital transformation

Digitalization has revolutionized the way FMCG companies operate, interact with consumers and distribute their products. E-commerce has facilitated the emergence of the Direct-to-Consumer (D2C) and FMCG companies can now directly sell their products to consumers. D2C also enables businesses to gather valuable customer data and feedback, allowing for more personalized marketing and product offerings. Companies such as Marico, Dabur among others have introduced their digital-first brands, which significantly contribute to overall revenue. Through data analytics and AI-powered algorithms, e-commerce platforms can track consumer behavior, preferences, and purchase history and this allows companies to tailor product recommendations and marketing campaigns, enhancing customer satisfaction and brand loyalty. The Internet of Things (IoT) devices and 3D Printing technology further enable FMCG companies to enhance direct distribution to meet the growing customer expectations.

Rural recovery

India's FMCG industry saw a +9 per cent value growth in the third quarter of 2023, fueled by volume growth. Rural markets continue to recover at 6.4 per cent volume growth, according to a NIQ report in November.This indicates positive consumption patterns in India as inflationary pressures ease and price increases slow down compared to the previous quarter. These shifts helped increase the spending power of consumers, especially those in rural markets where consumption has increased across categories. Categories including impulse foods have shown strong growth, habit-forming categories such as Biscuits, Tea, Noodles, and Coffee, recovered growth in Q3 2023. As Rural Markets continue to recover, there are signs that consumers are beginning to spend more on non-essential categories.

Growth of non-food category

Both Food and non-food sectors are contributing to the growth in consumption in the Indian FMCG market.The non-food sector exhibited a growth rate of +8.7 per cent over last year, a significant increase from the +5.4 per cent growth of the previous quarter, according to NIQ report. The improvement in the Non-food category can also be attributed to an increase in rural consumption growth.

Sustainability

FMCG companies are committed to reducing their environmental impact and offering products that are made with sustainable materials and packaging. Firms are responding to this demand by launching a wide range of sustainable products, such as recyclable and compostable packaging, products made with organic and sustainable ingredients and products that are designed to reduce waste.

For example, HUL,PepsiCo, ITC, Dabur, DS Group, amongst others are committed to sustainable milestones and targets. For instance, ITC scaled up its sustainable packaging offerings for plastic substitution and announced several measures to reduce the utilization of plastic across products and businesses. Similarly, DS Group has taken various sustainability initiatives in areas of energy management, water management, material conservation, recycling & waste management and enhancing green footprint.