FMCG Sector Grows For Second Straight Quarter, Says Nielsen
The fast-moving consumer goods sector saw its value grow for the second straight quarter on the back of festive season consumption, according to NielsenIQ.
The industry's value—a combination of volume and revenue—rose 7.3% over a year earlier in the quarter ended quarter December, NielsenIQ’s Retail Intelligence said. That was driven by growth in traditional and organised trade.
“While the Indian consumer has had a tough year, the last quarter of 2020 has seen a recovery in consumption as economic activities have started moving back to normalcy," Diptanshu Ray, lead, retail intelligence, India, Nielsen IQ, said in the statement. "The festive season brought a further boost to the sentiment and since then there has been a visible uptick in growth for the industry, resulting in increase in consumption across staples, and home and personal care."
Hygiene and immunity building categories continued on a high-value growth of 46% over a year earlier.
Home and personal care saw 5% volume growth.
Food saw 10% value growth.
Consumption of staples grew 18% year-on-year.
During the quarter, companies increased prices in foods and staples categories, Ray told BloombergQuint in an interview. But price-led growth was absent in discretionary items, he said.
After two quarters of decline, consumption is growing again in metropolitans or cities with a population of more than a million. Value rose 0.8% in October-December.
Rural markets continue to grow in double digits, up at 14.2% in the quarter compared with 10.6% in the preceding three months.
“This sharper recovery is on the back of favorable agricultural sector performance, government action towards rural employment generation, and as rural India had lesser impact of the pandemic,” the release said.
FMCG manufacturers with a turnover of less than Rs 100 crore grew 16% year-on-year, driven by both consumption and price increases.
Large manufacturers with annual sales of more than Rs 600 crore have also started growing after two quarters of decline. They saw a 5% value growth and 4% rise in consumption volume.
Traditional trade channels continued their growth momentum, with value growing 8% over a year earlier.
Modern trade channel value contracted 2% in the December quarter against a decline of 15% in the September quarter.
E-commerce is stabilising at a consumption level higher than pre-Covid. The e-commerce spurt is more prominent in metros.
“Sustained interest in health and hygiene products signifies a defining trend that the behaviour is now getting deeply ingrained as a habit," Sameer Shukla, executive director, retail intelligence, India, Nielsen, said in the statement. "In addition, people stepping out of home with caution and disrupted commutes have caused huge shifts in retail sales of FMCG categories, especially in bigger cities in India. These trends will have big implications for brands and retailers in the years to come."