The Rs 5-lakh-crore domestic fast-moving consumer goods (FMCG) market witnessed a decline in both overall value and volume growth in the September quarter compared with the year-ago period, as a slowdown in urban areas took a toll on business, a report by market researcher NielsenIQ released on Thursday showed.
Urban sales contribute to two-third of the FMCG industry sales, while rural contributes a third.
The overall FMCG value growth came in at 5.7% in the September quarter versus 9% a year ago. The overall volume growth stood at 4.1% in the quarter versus 8.6%.
Both urban and rural volume growth in the September quarter at 2.8% and 6%, respectively, are below the growth numbers reported in the same quarter last year (10.2% urban growth and 6.4% rural growth reported last year).
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Sequentially, the picture changes as rural volume growth is twice as fast as urban volume growth. While the urban volume growth was stagnant at 2.8% in the June and September quarters each, rural volume growth improved from 5.2% in the June quarter to 6% in the September quarter, NielsenIQ data show.
“There are macroeconomic factors that are a concern, plus the high base effect within urban is also there. In contrast, rural has strong tailwinds from the monsoons and good harvest this year. So, the rural engine of growth should continue,” Rohit Jawa, CEO & MD, Hindustan Unilever (HUL), said, after the company’s recent September quarter earnings.
Price-led growth improved to levels of 1.6% versus 0.4% seen a year ago. This was on account of price hikes taken by companies in response to inflationary pressures in tea, palm oil and copra among other commodities.
“The Indian FMCG industry showed resilience with steady value growth and marginal price increase. Small manufacturers are rebounding after a recent decline, while major players trail in value growth,” Roosevelt Dsouza, head of commercial, India, NielsenIQ, said in a statement on Thursday.
Large companies with sales between Rs 1,000 crore and Rs 5,000 crore, accounting for 20% of the FMCG market, experienced the highest growth in the quarter at 9.6%, according to the market research agency.
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