FMCG: Poised for long term growth
Executive Summary
1- Strong GDP growth and rising income levels have been boosting demand in India. Robust growth in organized retailing, too, is providing a fillip to urban markets while favorable agricultural growth and lower per capita consumption is improving rural demand for consumer goods, leading to accelerated growth in overall consumer demand.
2 - Dependence of agriculture on the monsoons still remains a concern while higher crude oil prices pose a threat to input costs. Nevertheless, higher input prices are expected to be offset by price hikes as, with revived demand, pricing power is expected to have returned to the sector.
3 - Those with strong cash flows are strengthening their position by making acquisitions to complement their present product range and also making a foray into less penetrated categories.
4 - In view of the expected continuing economic growth, the Sector should grow by 9% a year
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Source: PL
