FMCG rural demand drops in November

Rural demand for fast-moving consumer goods (FMCG) in November dropped because of a loss of momentum after the festival season.

Urban demand too has been affected, but the fall in rural consumption has been steeper on a month-on-month basis.

Demand in rural areas was down 17 per cent in November over October and urban demand decreased 10.1 per cent, according to the data by Bizom, a retail intelligence platform.

Overall, India’s FMCG sales declined 15.3 per cent while they were down 2.7 per cent on an annual basis.

“FMCG sales have dropped month-onmonth in November as stocking at kiranas has fallen significantly. Year-on-year sales also remain muted because consumption has slowed after the festivals,” Akshay D’souza, chief of growth and insights at Bizom, told Business Standard.

He added: “Rural lags urban sales and this is impacting the consumption and growth of FMCG products. Inflationary challenges seem to be playing a role as consumers here spend cautiously. Among cities, we see stronger performance across Tier-2.”

Category-wise, commodities (packaged food items like rice and flour) reported a drop of 23.7 per cent and the beverages also saw a month-on-month dip of 13.7 per cent in value.

However, the personal care category saw a growth rate of 3.9 per cent.

D’souza also said in November saw a strong drop in sales of commodities, especially those of edible oils, as consumers have stocked up in larger quantities in the build-up to the festival and those would be getting utilised currently.

There is strong traction in skincare products and heaters due to the onset of the winter season, D’souza noted.

Anghsu Mallick, chief executive officer of Adani Wilmar, said: “On a year-on-year basis, November this year was a better month. Also, October was a bigger month due to festival demand as retailers stock up ahead of Diwali. Companies also give schemes to retailers (which causes retailers to buy in higher volumes), which we don’t give and that could have led to the stocking.”

But Mallick said rural demand had been under pressure.

“Rural demand has not picked up the way I expected. I think rural incomes from harvest have not yet come into the hands of consumers because the harvest was delayed this year. I expect demand in rural areas to pick up from December onwards and it will be stronger as we enter January and February,” Mallick said.

Parle Products continues to see demand even after the festive month.