 "FMCG")
Fast-moving consumer goods (FMCG) in India have witnessed a recovery in volume after six quarters and the growth rate is now at 3.1 per cent in January-March, according to the data by NIQ, formerly known as NielsenIQ.
Value growth for goods -- ranging from shampoos to soaps to edible oils -- stood at 10.2 per cent as against 7.6 per cent in the October-December quarter.
“The Indian FMCG industry observed a recovery trend with a double-digit value growth rate of 10.2 per cent in Q1 2023 (Jan-Feb-March), faster than the last quarter (7.6 per cent in Q4). Value growth is driven by revival in consumption in rural markets and traditional trade which were under duress for more than a year. In line with stabilisation in retail inflation, price growth further dropped in the quarter (at 6.9 per cent in Q1 vs 7.9 per cent in Q4), aiding the revival in consumption growth this quarter,” NIQ said in its release.
Rural witnessed positive consumption growth (0.3 per cent) for the first time after six quarters. Revival in rural has been led by the south (2.8 per cent) and east (3.0 per cent) zones.
Urban markets continue a positive trajectory (5.3 per cent in the January-March quarter compared to 1.6 per cent in the October-December quarter) across both foods and non-foods categories.
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“Positive consumption growth in the hinterland seen in the quarter is heartening, as more than two-thirds of India’s population reside in rural areas of the country. Urban India continues to be the growth engine in terms of value growth, with organised retail seeing high double-digit growth in modern trade. For the first time last year, we also see a turnaround in traditional trade -- primarily driven by grocers,” Roosevelt D’Souza, India customer success leader, NIQ, said in its release.
“Grammage reduction and a shift towards smaller packs continue, so it becomes increasingly important for manufacturers to focus on innovation and optimise their assortment to cater to the changing consumer demands.”
According to NIQ’s FMCG quarterly snapshot, after a decline for six consecutive quarters, consumption growth for non-foods turned positive (0.2 per cent), led by home care categories, while personal care continues to decline. Consumers continue to rationalise their expenditure within non-food in home care and personal care, the research firm noted in its release.
At all-India level, foods continue to witness higher consumption growth up to 4.3 per cent in the quarter ended March compared to 1.6 per cent in the December ended quarter, with staples driving this uptick.
Habit-forming categories continue to decline despite an improvement sequentially, as double-digit price growth continues.
“The drop in the rate of inflation overall in the economy has also led to a decline in inflation for food categories and given an opportunity to consumers to be cautiously optimistic. This can be seen in the shifts in consumption patterns in the quarter gone by, and by consumers that are now willing to buy more,” said Satish Pillai, managing director (India), NIQ.
“The upward trends seen in rural markets is particularly encouraging, and may be the turning point for the industry,” he added.
At FMCG level, as well as within food, small manufacturers have driven the value and consumption growth (volume growth for small manufacturers is 7.2 per cent vs. 3.2 per cent for large manufacturers in food). Within non-food, however, large manufacturers have driven growth (volume growth for large manufacturers is 0.6 per cent vs. -1.8 per cent for small).
In its forecast, NIQ said that despite global uncertainties, India’s FMCG market growth forecast is at 7-9 per cent for full year 2023.
