FMCG sector growth at 4% in Apr-June on relaxed consumption: NielsenIQ data

Rural continues to outpace urban in volumes growth

India’s fast-moving consumer goods sector (FMCG) grew 4 per cent by value in April-June over the same period last year and on the back of relaxed consumption patterns, according to consumer research firm NielsenIQ.

Growth in volumes came in at 3.8 per cent.

Price growth stabilised in April-June at 0.2 per cent, underscoring a stable environment. Rural volumes growth in the quarter stood at 5.2 per cent while urban was at 2.8 per cent.

The two markets experienced softer consumption in the quarter, said the firm in a press release.

In January-March, rural volumes growth stood at 7.6 per cent and urban was at 5.7 per cent.

 

 

“This deceleration in volumes is largely due to macroeconomic headwinds. While rural volumes growth was at 5.2 per cent continues to outpace the 2.8 per cent growth in urban areas, both regions experienced softer consumption this quarter,” said Roosevelt Dsouza, head of customer success (India), NielsenIQ.

Growth in volumes has been under pressure for over a year due to weak rural demand. However, in April-June, companies witnessed an uptick in rural demand and a hint of revival in growth in volumes.

Growth in consumption has been primarily affected by the food sector, with expansion at 2.4 per cent in April-June compared to 4.8 per cent in January-March.

NielsenIQ attributed the moderation to the staples categories -- packaged salt, packaged atta (wheat flour), and palm oil.

In non-food, growth in volumes stood at 7.6 per cent in the quarter ended June compared to 11.1 per cent in the quarter ended March.

“This downtrend in consumer demand for personal care and home care categories is observed in both urban and rural. In urban markets, personal care categories are witnessing a volume growth at 5.2 per cent in April-June (vs. 9.7 per cent in January-March), while in rural it is resting at 8.3 per cent in April-June (vs. 10.6 per cent in January-March),” said NielsenIQ.

In rural India, high contributing categories like laundry and utensils cleaners within homeware witnessed slow consumption.

Summer-specific categories like soft drinks, packaged drinking water, prickly heat powder, and glucose powder saw a sharp uptick in April-June. Soft drinks grew two times faster than FMCG but saw some moderation sequentially.

“Within the broader FMCG industry, large players continue to demonstrate stronger performance (than) small, mid players, and giants. Small players face challenges in keeping prices stable, thereby impacting their volumes,” said NielsenIQ.