 "FMCG sales growth declines further in September quarter")
The growth rate of sales of fast-moving consumer goods (FMCG) slowed down further to 4% in the September quarter from 6% in the June quarter, according to Kantar Worldpanel, a WPP group agency.
FMCG sales volume growth declined nearly 75% from 7% during the same period a year ago.
Growth suffered most in food and beverages, where the rate has halved since last year to 4% due to a sharp decline in rural consumption. Sales volume growth in the rural market declined to 5% during the September quarter from 11% in the same period of 2015. The sales volume of food and beverages in the rural market grew 9% during the June quarter.
Sales of household care and personal care products, however, improved, with the personal care category growing 5% during the September quarter against 3% in the year-ago period. Sales of household care items grew by 6% during the quarter, up from 4% in the same period of 2015.
Consumption of these items has increased in both rural and urban markets. Personal and household care product sales in urban markets have improved during the first two-quarters of 2016-17. During the previous 13 quarters, the growth rate in these two categories remained below 4%.
Sales in urban markets grew at a lower rate than rural areas. The growth rate for all categories was 3% in urban areas and rural sales grew by 5%.
“FMCG sales growth continues to be muted, both in urban as well as rural markets. The growth seen during April-June in rural markets on account of growth in food purchases has also come down, indicating it was an adjustment on account of the harvest period. The outlook for the next quarter is similar,” said K Ramakrishnan, country head, Kantar Worldpanel.
Urban markets suffered due to a lack of adequate job creation and uncertainty over macroeconomic conditions. In eight labour-intensive sectors only 155,000 jobs were created in 2015 compared to over 300,000 in 2014.
Analysts said FMCG companies delayed price hikes during the September quarter to offset the subdued growth in sales. Value growth for rural and urban markets was 8% while the volume grew by 5 and 3%, respectively. In individual categories growth in value terms remained 3-4 percentage points higher than volume growth.
Demonetisation has lowered retail sales by 40-70% and experts predict the FMCG sector may witness declining sales in the December quarter. “Demonetisation had little impact on our internal transactions but sales at the retailer and distributor levels have been severely affected. Given that liquidity remains a concern, this will have an impact on our sales figures,” an executive with an FMCG company said.
