Walmart Inc. Best Price Modern Wholesale store in Hyderabad, India. ( Photographer: Dhiraj Singh/Bloomberg)

Falling Rural Consumption To Slow Down FMCG Industry Growth, Says Nielsen

Growth for consumer goods industry has declined after rising for two straight quarters, Nielsen India said, predicting a slower pace of increase through 2019 because of weakening rural consumption.

The value of fast-moving consumer goods industry rose 13.6 percent year-on-year in the three months ended March, Nielsen India said. That compares with a growth of 11.6 percent a year earlier and 15.9 percent in October-December and 16.5 percent in July-September.

Volumes are expected to rise 9.4 percent year-on-year in the three months ended March compared with 7.5 percent a year earlier.

In the last nine months, rural India’s consumer growth by value has declined by 4.5 percentage points to 15.2 percent as of March, according to Nielsen India. Rural growth, which is typically 3-5 percentage points higher, is now on a par with the pace of increase in urban areas.

That’s because of a decline in the consumption of packaged food, both in essential and impulse categories. Essential foods include packaged flour, refined oil and spices, while buys are biscuits, chocolates and confectionery.

Slower Growth Outlook

Nielsen India pegged the FMCG industry to grow at 11-12 percent in 2019, about 200 basis points slower than 2018. Macro-economic factors like inflation and GDP growth, rural consumption and a high-base in the second half of 2018 are likely to impact growth.

In 2019, the market researcher expects:

  • The food category to grow at 12-13 percent by value, lower than last year’s 15 percent.
  • Personal care to grow at 10-11 percent compared with 12.3 percent.
  • Home care to expand 10-11 percent, unchanged from the previous year.