A shopper walks through an aisle displaying personal care goods at a hypermarket. (Photographer: Dhiraj Singh/Bloomberg)

FMCG Sector Grows At Fastest Pace In Five Quarters, Says Nielsen

India’s fast-moving consumer goods sector grew at the fastest pace in five quarters, helped by a rise in consumption, improving rural demand and low inflation, according to Nielsen India.

The industry reported a value growth of 16.5 percent in the quarter ended September, the market researcher said in its report. Volumes grew at 13 percent. In both cases, it’s the fastest growth since April-June last year.

Growth recovered as expected from the disruption of the Goods and Services Tax, according to Nielsen. And rural growth continues to outpace urban. Also, strong growth in the north and the east helped, said Sameer Shukla, executive director, South Asia at Nielsen.

The agency expects the sales to rise by 12-13 percent in the ongoing quarter, slowing down because of a sharp depreciation in the rupee after fuel prices surged. The other factor that will weigh on growth is the below-normal monsoon (91 percent of the long-term average) against a forecast of 97 percent, and the floods in Kerala.

Headroom For Growth In Modern Trade

Nielsen reiterated the potential for India’s modern trade to grow, helping consumer goods sales. Hypermarkets, supermarkets and small organised outlets now contribute more than 10 percent to the industry’s revenue.

Hypermarkets and supermarkets are now focusing on increasing same-store sales growth and are promoting “big days and weeks”, Nielsen said in its report. They are “creating more such occasions to offer promotions, leading to increased footfall and expanded shoppers’ basket”.

Future Group’s Easyday and Avenue Supermarts Ltd.’s D-Mart outlets, and pharmacies like Apollo and Medplus, and standalone supermarkets saw a double-digit annualised growth in the last two years as they opened more stores in cities and towns with more than 5 lakh people.

Online retail is also slowly increasing its share in the FMCG industry. Nielsen expects e-commerce to contribute 11 percent of sales by 2030 compared with 0.4 percent in 2016 and an estimated 1.3 percent by the end of this year.

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