Unseasonal rain curtails FMCG demand in May; rural segment grows 2.2%

Beverage sales were down 29.4% YoY in May; March-June accounts for over half of the annual demand

Demand for fast-moving consumer goods (FMCG) was up marginally in May, compared to the year-ago period, largely aided by the rural market as urban demand shrunk. Also, demand for branded commodity products was strong during the month.

Sales of FMCG items, in value terms, were up 1.4 per cent in May compared to the same period last year. In comparison, rural sales growth stood at 2.2 per cent in May compared to last year, according to data by Bizom, a retail intelligence platform. 

On the other hand, urban demand (in value terms) witnessed a decline of 0.6 per cent.

The drop was mainly seen in mega cities (population of over 5 million) as demand was down 1.1 per cent compared to the same month last year. In April, overall demand for FMCG products was down 8.4 per cent as both rural and urban demand was impacted.

Bizom said that FMCG sales were marginally higher in May compared to last year due to lower stocking of summer products like beverages. 

“This is mainly because unseasonal rain led to a drop in temperatures in the country. Across large parts of North, Central and Western India as well as some regions in South India, we've seen excessive rainfall in a large number of districts,” Akshay D’Souza, chief of growth and insights at Bizom, told Business Standard.

Sales of beverages were drastically impacted in May as it was down 29.4 per cent compared to last year. In fact, it was the most-impacted category. 

He further added, “The resulting drop in temperatures has impacted sales of summer products mainly as stocking has dropped significantly compared to the earlier years. Among the impacted categories are beverages, which see almost 50-60 per cent of their sales during the summer months of March-June.”

Branded commodity (including wheat flour and edible oil) sales were up 23 per cent compared to May last year. D’Souza also said that last year Bizom noticed that consumers started buying smaller packs due to heavy inflation in these products.

Personal care and confectionery sales were also negative in May.

D’Souza said, “Confectionary products are expected to rise from June onwards as schools and colleges reopen. Personal care product sales are still facing a challenge as consumer spends remain focused on ‘need’ products rather than ‘want’ products.

Also, according to Bizom data, the number of active kirana outlets was up 2.9 per cent year-on-year. However, stocking per kirana was down 1.5 per cent.

“Rural demand has been picking up. Volumes in May in rural areas were up 2.5-3 per cent and value growth was about 5-6 per cent. We believe that demand will continue to improve, going ahead,” Mayank Shah, senior category head at Parle Products said. “We have not seen any impact on urban demand for our products,” Shah added.