India’s FMCG Sector Growth Slows For The Fifth Straight Quarter, Says Nielsen

Value growth of India’s fast-moving consumer goods sector slowed for the fifth straight quarter as the economy slowed, unemployment rose, consumer price inflation jumped and some states saw untimely and excess rainfall, according to Nielsen India.

The industry’s value growth—a combination of volumes and price-led expansion—stood at 6.6 percent on an annual basis in the three months ended December, compared with 15.7 percent a year earlier, according to a report by the market researcher. That came as volumes and prices rose at their slowest pace in at least four quarters.

While volumes grew 3.5 percent against 11.9 percent in the year-ago quarter, price-led expansion stood at 3.1 percent compared with 3.8 percent a year ago, Nielsen said.

Including e-commerce, FMCG industry’s value grew at 7.3 percent during the quarter ended December. Online sales rose 53 percent and now contribute 2 percent to the market.

Rural demand stabilised during the quarter, while urban consumption weakened, Nielsen India said.

• Value growth in rural India stood at 5.2 percent in October-December, down from 18 percent a year ago and 5.3 percent in the preceding quarter.
• Value growth in urban areas was 7.4 percent against 14 percent in the corresponding quarter last year and 8.4 percent in the previous three-month period.

Rural India contributes 36 percent to overall spends on FMCG and has historically been growing at 3-5 percentage points faster than urban areas, Nielsen India said. The fall in demand for consumer goods, it said, was sharper in west India, while the north, south and east remained stable.

FMCG value in the west grew 4.6 percent, down from 15 percent in the corresponding quarter last year. “The slowdown in the zone was led by shrinkage in volume growth, which was almost flat at 1.1 percent in Q419 (11 percent in Q418),” Nielsen India said.

Demand from modern trade, however, grew in the west zone.

Outlook

• Nielsen India expects value growth in the FMCG sector to be between 9 percent and 10 percent in 2020.
• The market research firm expects the FMCG sector to grow at 8-9 percent in January-March—the slowest for the period in three years.

Watch the full video here...