Rising inflation has hit small companies in the FMCG sector

MUMBAI: Inflationary pressures are hitting not only consumers but also small companies in the fast moving consumer goods (FMCG) sector. Consumption by consumers is declining due to increase in prices.

According to a research firm, the share of large manufacturers in the value added of the FMCG industry was 5 per cent in the September quarter, while that of small manufacturers was only 2 per cent.

A company with a turnover of over Rs 200 crore is considered a large producer while a company with a turnover below Rs 100 crore is considered a small producer.

Compared to the September quarter of last year, the value added of FMCG industry in the September quarter of the current year has been 13.50 per cent. Inflationary pressures and a slowdown in rural consumption affected small producers in the FMCG sector in the September quarter, the report said.

As many as 12 per cent of small producers have been knocked out of the market, compared to last year. Rising commodity prices have forced producers to pass on consumption, which has a direct impact on demand or consumption.

The report also notes that due to higher prices, some consumers who used to use premium products have now turned to the popular price segment. Not only that, many users have been forced to reduce their consumption.

The decline in consumption by consumers has further affected small producers. It is difficult for them to compete with the big producers.