NEW DELHI : For India’s packaged consumer goods industry, the March quarter signaled a major turnaround as rural demand outpaced urban markets for the first time in 15 months.
Rural markets have been a significant concern for India’s fast-moving consumer goods companies for longer than a year, although urban shoppers have more than made up with increased spending on packaged items.
In the March quarter, the FMCG industry reported a 6.6% growth in value terms, driven by a 6.5% increase in volumes, consumer intelligence firm NielsenIQ said on Tuesday. NIQ follows a calendar year.
“The FMCG industry’s growth continues to be driven by consumption trends in Q1’24 (JFM’24), with rural areas surpassing urban growth for the first time in five quarters,” said Roosevelt Dsouza, head of customer success, India, at NIQ.
“Notably, home and personal care (HPC) categories have outperformed food categories. While food categories witness higher unit purchases, the growth in HPC is largely driven by the popularity of larger pack sizes.”
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NielsenIQ highlighted a “gradual uptick” in rural consumption that surpassed urban consumption in the March quarter.
While urban markets reported a 5.7% year-on-year jump in demand, the growth was slower than December quarter’s 6.9% increase. Rural demand, on the other hand, was up 7.6% year-on-year in the March quarter.
Modern vs traditional
Within the retail sector, modern trade reported “strong” double-digit volume growth at 14.7% for the March quarter. Traditional trade, on the other hand, experienced stable growth, with volumes growing at 5.6% as compared with 5.3% in the December quarter, suggesting that traditional retail channels are holding their ground.
Modern trade includes large format retail stores as well as e-commerce platforms. Traditional trade, on the other hand, typically includes the ubiquitous small groceries or neighbourhood stores.
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Across India, both the food and non-food sectors contributed to the growth in consumption.
In the March quarter, the non-food category grew twice as fast as the food category. The foods sector reported a volume growth of 4.8% year-on-year, albeit down from 5.3% in the December quarter. NIQ attributed this drop to a slower pace of growth within the staples category.
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In contrast, the non-food category saw an improvement with consumption growth reaching 11.1% year-on-year in the March quarter.
“This improvement can be attributed to an increase in rural uptick, with a growth rate of 12.8% in Q1’24 (versus 9.8% in Q4’23); led by personal care and home care categories. In urban areas, the non-food sector is witnessing increasing consumption in personal care growing at 8.4% in Q1’24 (versus 5.8% in Q4’23),” the market researcher said.
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Published: 07 May 2024, 12:23 PM IST