Rural demand continued to outpace urban in April-June period: NielsenIQ

India's FMCG market grew 13.9% in April-June, driven by rural demand, smaller packs, and e-commerce gains in metros, even as urban recovery narrowed the rural-urban gap

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India’s fast-moving consumer goods (FMCG) market grew 13.9 per cent in value in the April–June quarter, supported by sustained rural demand and steady urban recovery, according to NielsenIQ (formerly Nielsen).

 

Volume growth in the quarter was 6 per cent, while prices rose 7.4 per cent. Unit growth outpaced overall volume growth as consumers continued to opt for smaller packs.

 

Demand from rural areas outpaced urban for the sixth consecutive quarter, rising 8.4 per cent compared to 4.6 per cent growth in urban demand. However, the gap narrowed as urban areas showed signs of sequential recovery, primarily driven by smaller towns, while metropolitan areas continued to see a decline in consumption owing to channel shifts.

 

While e-commerce continued to expand in April–June, it gained ground on modern trade in eight metros. Southern metros led the e-commerce push with an 18.4 per cent share compared to 15.8 per cent for the eight metros overall.

 

“Even though e-commerce accounts for just 11–13 per cent of FMCG value share in metros, it is already delivering more than half of omnichannel growth. Despite the pullback of quick commerce dark stores, Q2FY25 consumption in e-commerce surged—driven by higher shopper penetration and consistent spending, even among new shoppers,” NielsenIQ said.

 

Sharang Pant, head of FMCG customer success at NielsenIQ in India, said: “The Indian FMCG sector continues to demonstrate resilience, with rural markets leading the charge for six consecutive quarters. While urban recovery is gaining traction, particularly in smaller towns, rural demand remains the cornerstone of volume expansion. E-commerce is emerging as a key growth engine, especially in the top eight metros.”

 

He added that with easing inflation and a favourable monsoon forecast, the consumption outlook remains optimistic. However, sustaining momentum will require deeper channel engagement and sharper, value-led propositions. “The industry is entering a phase where agility and consumer-centric innovation will be critical to future success. Additionally, the rapid rise of small manufacturers outpacing overall industry growth highlights shifting market dynamics and intensifying competition,” he said.

 

In the quarter, food consumption largely remained stable at 5.5 per cent, driven by higher volumes in staples and impulse categories. Home and personal care saw stronger momentum with 7.5 per cent consumption growth. Over-the-counter categories posted a robust 14.2 per cent rise in value sales, largely due to an 11 per cent increase in prices.