E-comm FMCG market to hit $100-105 bn by FY2025; digital transformation reshapes landscape

The e-commerce FMCG market in India is expected to reach $100-105 billion by FY2025. Success will depend on balancing traditional operations with digital capabilities, keeping products affordable and accessible, and creating personalized customer experiences, says Marico's MD and CEO, Saugata Gupta.

By  Storyboard18Dec 27, 2024 11:56 AM
E-comm FMCG market to hit $100-105 bn by FY2025; digital transformation reshapes landscape
India's FMCG sector is going through a major transformation, trying to balance several competing demands, Marico's MD and CEO highlighted in a year-end note.

In a year marked by rapid digital adoption and shifting consumer preferences, India's Fast-Moving Consumer Goods (FMCG) sector underwent a dramatic transformation, industry leaders say. The changes reflect a delicate balance between traditional retail networks and emerging digital channels, with companies racing to meet evolving customer expectations.

"The transformation of the FMCG industry represents more than a channel shift – it's a fundamental redesign of how consumer goods companies create and deliver value," said Saugata Gupta, managing director and CEO of Marico, one of India's leading consumer goods companies.

The surge in digital initiatives across the sector has been remarkable, with 75% of companies prioritizing digital transformation, Gupta pointed in a social media post he shared with his followers. However, Gupta noted that only 12% felt adequately prepared for the associated supply chain complexities, highlighting a significant gap between ambition and execution capability.

Quick commerce has emerged as a particular bright spot, now accounting for 35% of online FMCG sales – double the previous year's figure. This growth has been driven by changing urban consumption patterns and a growing preference for convenience, particularly in the ready-to-eat and beverages categories.

The rural market, traditionally considered challenging, has shown promising growth. "Rural India is growing steadily, with rising incomes driving the demand," Gupta explained. Despite challenges posed by food inflation, premium products have maintained their appeal among middle-class consumers, who increasingly prioritize quality and health-conscious offerings.

Sustainability has also moved from the periphery to become a core consideration for many companies. The introduction of the BioE3 Policy has accelerated the adoption of eco-friendly packaging and bio-based production methods. This shift reflects growing environmental awareness among consumers and regulatory push toward sustainable practices.

The digital transformation is expected to continue accelerating, with India's e-commerce FMCG market projected to reach $100-105 billion by fiscal year 2025. However, industry leaders emphasize that success will require more than just digital capabilities.

"The future of FMCG belongs not to the largest or the most digital companies, but to those that can most effectively combine the efficiency of traditional operations with the agility and consumer-centricity of digital-first brands," Gupta said.

Looking ahead to 2025, the industry faces the challenge of balancing innovation with accessibility. Companies must navigate the complexities of digital transformation while ensuring their products remain affordable and accessible to the broader population.

Gupta emphasized the importance of maintaining this balance: "Creating meaningful and personalized experiences that truly connect with consumers" will be crucial for success in this evolving marketplace.

As the sector continues to evolve, the focus appears to be shifting from mere digital adoption to more sophisticated integration of traditional and modern retail channels, with an eye toward sustainability and consumer-centric innovation.

First Published on Dec 27, 2024 11:54 AM

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