New Delhi: The country’s fast-moving consumer goods (FMCG) industry witnessed a contraction in consumption in the December quarter, with overall “negative” volume growth as consumers grappled with inflationary pressures, a report said. According to a report released on Thursday by data analytics firm NielsenIQ, the FMCG industry grew 7.6 per cent in value terms in October-December but recorded a volume growth of (-) 0.3 per cent.
“…overall FMCG volume growth is negative, with absolute values, as well as volumes, remaining above pre-Covid levels across all markets,” it said.
Rural markets registered a decline of 2.8 per cent for the sixth consecutive quarter with negative volume growth, while the urban market maintained a steady positive growth of 1.6 per cent. In retail, Modern Trade channels maintained double-digit value growth of 23.3 percent and volume growth of 12.6 percent on a year-on-year basis. While FMCG sales from traditional trade channels such as grocery stores “saw continued negative consumption growth (-1.5 per cent) for the fifth consecutive quarter”.
“Consumers continue to feel the pressure of inflation, while manufacturers are also shying away from promos to maintain margins,” said Sonika Gupta, Customer Success Lead (India), NielsenIQ. Moreover, consumers prefer to buy smaller packets from both traditional and modern trade outlets, the report said.
“Manufacturers should continue to support smaller packs in their portfolio as a means to drive consumption, especially in the case of non-food categories to bring relevance back.” As players they make a comeback,” he said.
Continuing the previous trends, sales of food items as a staple and impulse continue to drive consumption, while non-food FMCG products are still being shunned by consumers. “Bucket in non-food consumption continues to decline and has seen volumes lower than pre-Covid levels in the recent few quarters.
It added, “This has also been observed in the trend of smaller assortment and declining stock levels in retail locations – as well as manufacturers cutting promos for categories such as washing powder, detergent bars, toilet soap, shampoo etc.” “
It added that small manufacturers continue to drive consumption through the food basket, while high price increases in the non-food sector have affected small businesses. Giving details of region-wise consumption growth, the report said that the northern and eastern regions registered positive quantum growth of 0.1 per cent and 0.6 per cent, respectively.
“Although the West and South regions are showing negative consumption growth, there are marginal improvements over the same period last year,” it said.