Rural FMCG Demand Grows At Slowest Pace In Seven Years, Says Nielsen India
A man takes a bar of Hindustan Unilever Ltd. Lux soap off a shelf at a store in Mumbai. (Photographer: Kuni Takahashi/Bloomberg)

Rural FMCG Demand Grows At Slowest Pace In Seven Years, Says Nielsen India

Demand for consumer goods makers in rural areas grew at its slowest pace in seven years as incomes fell and liquidity stress prevailed amid a slowdown in the economy, according to Nielsen India.

Value growth in India’s fast-moving consumer goods industry dropped to 7.3 percent during the quarter ended September from 16.2 percent a year ago, the market research firm said in its quarterly insights report.

  • Value growth in rural India stood at 5 percent during the quarter compared with 20 percent a year ago.
  • Value growth in urban areas stood at 8 percent compared with 14 percent in the corresponding quarter last year.

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. But high rural inflation, lowest yearly wage hike in a decade and crop loss due to floods impacted farm income, led to a slowdown in demand.

The fall in demand for consumer goods, Nielsen India said, was sharper in north India than any other regions. Demand growth in rural areas in the northern part slumped by 20 percentage points year-on-year to 2 percent, while in urban areas, it fell by 10.5 percentage points to 8 percent during the quarter.

Growth in demand in rural areas in south India declined by 6 percentage points year-on-year to 11 percent, while in urban areas it rose by 2 percentage points to 12 percent.

Also read: Q2 Results: HUL Profit Meets Estimates Even As Volume Growth Remains Flat

Outlook

  • Nielsen India expects growth in the FMCG sector to be between 6.5 percent and 7.5 percent in the October-December quarter.
  • The market research firm maintains its yearly forecast to be at 9-10 percent.
  • Demand is expected to revive in 2020. It’s expected to grow at 7.5-8.5 percent in the January-March 2020 quarter.

WATCH | Nielsen India’s quarterly insights here:

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