FMCG companies expect rural demand to remain resilient

According to a report released by Motilal Oswal Research, rural consumption continued to outpace urban consumption in Q2 FY26 due to income guarantee schemes, better rainfall outcomes, NBFC-led credit growth and easing input costs besides GST rate cuts. 

Rural consumption continued to outpace urban consumption in the September quarter and is expected to remain on a steady upward trajectory, say FMCG companies and analysts. This is being aided by factors including better monsoons, healthy rabi crop prospects and GST rate cuts.

Mohit Malhotra, CEO, Dabur India, said that the company has seen sustained resilience in terms of consumption in rural regions and is leveraging on the tailwinds. “Rural is sustaining growth for the company. There is a 5.6 per cent growth which is happening overall in FMCG. The rural (region) is growing at 8.5 per cent and urban is growing at around 3 per cent. There is a difference of around 400 to 500 bps between urban and rural growth for FMCG and for us also. So, we see a 7 per cent odd growth happening in GT in rural and we see around 3 per cent odd growth happening as far as our urban is concerned,” he stated on the Q2 FY26 investor call.

“So, there is a tailwind of rural. To capitalise on this tailwind, we are looking at the LUP (low unit packs) bundles and doing a lot of activation in rural and harnessing that growth of rural. We are looking at initiatives for expanding our distribution going forward, reaching out to more number of villages and increasing our portfolio, increasing visibility to our sales as far as the rural is concerned,” he added.

Malhotra also noted that the reduction in GST rates is also leading to a shift from the unorganised segment to the organised segment in rural regions. “As far as rural is concerned, we see unorganised to organised movement because the price points have quite bridged between unbranded and branded,” he added.

According to a report released by Motilal Oswal Research, rural consumption continued to outpace urban consumption in Q2 FY26 due to income guarantee schemes, better rainfall outcomes, NBFC-led credit growth and easing input costs besides GST rate cuts. “Rural demand is expected to remain on a steady upward trajectory, underpinned by rising real wages (both agri and non-agri). Healthy rabi prospects, coupled with lower rural inflation, should help to sustain the ongoing improvement in consumption,” the report released on Friday noted.

Echoing a similar sentiment, Angshu Mallick, MD & CEO, AWL Agri Business Ltd (formerly known as Adani Wilmar), told businessline, “We have seen rural doing better and urban consumption being under pressure in the first half of the year. Now, the wedding season has started in November. The rabi crop will be harvested in February and March and if the three major crops of wheat, chana dal and mustard come up well, there will be more money in the hands of rural consumers.”

Nestle India noted that in the September quarter its confectionery portfolio witnessed rural acceleration, while Maggi Noodles portfolio increased market share in rural geographies. “India remains the second largest KitKat market for Nestlé worldwide. The numeric distribution expansion of Kitkat, particularly in rural areas, contributed to this growth,” it stated in its Q2 earnings report. 

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Published on November 9, 2025