Chemists, E-Commerce Cushioned FMCG Market During Second Covid Wave, Says NielsenIQ

India’s consumer goods makers saw their value grow over a year earlier for the fourth straight quarter as sales via pharmacies and online retailers helped cushion impact of the second Covid wave on consumption, according to NielsenIQ.

The fast-moving consumer goods industry’s value—a combination of volume and revenue—rose 36.9% year-on-year in the three months ended June, NielsenIQ said. Chemists and ecommerce channels saw double-digit growth during the period, it said.

Rural demand rose 0.7% over the prior quarter, while urban consumption declined 3.7%. Metros relied heavily on online sellers.

“If we go by just the average number of closure days for retail shops, wave two was less severe than wave one of the pandemic. The lockdowns were decentralised and partial in nature, which allowed for greater accessibility for consumers," Diptanshu Ray, NielsenIQ South Asia lead, said. This prevented panic-buying and ensured lesser disruption to the supply chain, he said.

The FMCG industry's moving annual total, a measure of sales in the preceding 12 months, rose 12.5% as of June and volume grew 6.4%.

The chemist channel's contribution to the overall FMCG sales went to an all-time high stood at 10.4% in the quarter ended June and rose 19.9% in the trailing 12 months.

In the pre-Covid January-March of 2020, the contribution of FMCG sales from the chemist channel stood at 8.6% and was in the of 8-8.5% range for 12-18 months prior to the pandemic, Ray told BloombergQuint.

Sale of FMCG goods via mom-and-pop stores rose 14% in the quarter.

During the second wave, chemists were the only channel which could function without restrictions due to which distributors also stocked up goods at medical stores. “This (chemist) channel will remain important for the industry due to restricted mobility and increasing health consciousness of consumers."

Modern trade is still in the recovery phase when benchmarked to pre-Covid period. With the big days (Independence Day sales) and festive season coming up, the trend is likely to move up and recover further, NielenIQ said in its release. “In fact, had it not been for the second wave and the delay in pick-up from certain baskets, particularly in the non food space, modern trade would have continued to move along the upward trajectory.”