Growth In FMCG Industry Headed For A Slowdown, Says Nielsen India

Growth in India’s fast moving consumer goods industry declined for a second straight quarter in the April-June period and is heading towards a slowdown, according to market research firm Nielsen India’s quarterly insights report released on Wednesday.

The FMCG industry’s value growth dropped to 10 percent in the April-June quarter from the highs of 16.2 percent in July-September quarter of 2018, Nielsen India said. The volume growth of the sector too dropped by 3.6 percentage points sequentially to 6.2 percent in the April-June period.

The market research firm said the growth in rural India is slowing at double the rate compared to the growth in urban areas.

Softening in demand at start of the year was largely driven by essential and impulse food categories, Nielsen said. The June quarter, however, witnessed a slowdown across all food as well as non-food categories such as salty snacks, biscuits, spices, toilet soaps, and packaged tea, it said.

The slowdown in FMCG, according to Nielsen, is largely driven by north and west India, with growth coming down to single digits during the quarter. States such as Haryana, Madhya Pradesh, Uttar Pradesh, Maharashtra and Assam are leading the slowdown, it said.

Key macro indicators like slowdown in rural output, reduced government spending and untimely rains in north India also point towards a slowdown, the report said.

Outlook For 2019

• Nielsen India has revised its growth forecast for 2019 and expects it to be in the range of 9-10 percent.
• Food categories to grow at 10-11 percent, while the home care category is expected to grow at 7 percent and personal care at 8 percent.
• The outlook for the next quarter (July-September) stands at 7-8 percent and in July-December period, the growth in the sector is expected to be around 8 percent.

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