Nielsen Says Rural India’s Consumption Slows to a Seven-Year Low
Customers shop at a roadside market in a village on the outskirts of Alwar, Rajasthan, India. (Photographer: Anindito Mukherjee/Bloomberg)

Nielsen Says Rural India’s Consumption Slows to a Seven-Year Low

(Bloomberg) -- Sales of fast moving consumer goods in rural India had their slowest growth in seven years as sagging incomes and a broader credit crunch weighed on spending in the country’s hinterland, where the majority of its population lives.

Sales growth of corner-store items from tea to toothpastes dipped to 5% across India’s villages in the quarter ended September, tumbling from 20% last year, according to a Nielsen report released Thursday. Expansion in villages also dropped below urban levels for the first time, dragging the overall growth to 7.3%, less than half of what it was in the same quarter in 2018.

The latest survey points to households across India reducing spending as Asia’s third-largest economy grows at the weakest pace in six years. Carmakers are already facing the worst sales in decades and this week Hindustan Unilever Ltd., the nation’s biggest consumer goods maker, said it wasn’t seeing signs of a revival yet.

“It’s been a pretty long time since we have seen” rural growth expanding at half that of in urban areas, Sanjiv Mehta, chief executive officer of Hindustan Unilever, said on a conference call with analysts. “A hope is there that things should improve. But at this stage, we are not seeing a sign.”

The report has also found that the slowdown is far worse in the northern parts of India which has a higher dependency on the rural segment and has seen a surge in unemployment rates.

Growth may recover in 2020, according to Nielsen. Hindustan Unilever’s Chief Financial Officer Srinivas Phatak this week said India’s move to spur a revival may help boost growth.

“We are now finally seeing early signs of the declining trends being arrested,” the Nielsen report said which forecasts growth in consumer goods sales to rebound as high as 8.5% in March next year.

©2019 Bloomberg L.P.

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