Country’s FMCG industry recovers on higher urban consumption, says report
Overall consumption has revived as unit volume has increased on a sequential basis in the April-June quarter but on an annual basis
NEW DELHI: The country's FMCG industry reported a 10.9 per cent growth in terms of value in the June quarter, helped by a rise in consumption even though the rural markets remained sluggish in non-food segments, says a report.
Data analytics firm NielsenIQ on Tuesday said the overall consumption has revived as unit volume has increased on a sequential basis in the AprilJune quarter but on an annual basis, it had a negative growth of 0.7 per cent in the latest quarter under review.
In the April-June 2022 period, the urban markets revived with positive volume growth of 0.6 per cent but the rural markets reported a negative growth of 2.4 per cent.
"The industry also observes positive momentum in volume along with price-led growth. The volume growth which was 4.1 per cenr in last quarter (January-March) has improved to some extent at 0.7 per cent in (April-June) 22," NielsenIQ said in its FMCG Quarterly snapshot report.
NielsenIQ Managing Director India Satish Pillai told PTI that there has been a doubledigit price growth in the last five quarters, owing to factors such as inflation and other macro economic variables.
"A tempering of these would help propel growth further in the last quarter. It is important to note that the consumption uptick has come from the unit growth as a predominant driver of FMCG for the quarter," he said.
The FMCG industry witnessed a growth of 10.9 per cent in terms of value in the June quarter, the report said.
According to him, the latest trend beats the last two quarters of consumption decline and highlights the onset of cautious optimism among consumers.
"Also, the consumption recovery and promising macro factors support NielsenIQ's forecast of double-digit growth for 2022," he added.
He noted that while urban markets have shown recovery of consumption, the rural markets are following closely.
"The decline in consumption from the last couple of quarters is arrested for foods in rural markets but it is yet to come back to a positive consumption growth for non-foods," he said.
According to the report, recovery in FMCG consumption in the latest April-June quarter is led by unit growth as consumers moved to smaller pack sizes and grammage reduction from manufacturers in key price packs. "While the volume decline is driven by the drop in average pack size growth, unit growth has bounced back to 8.9 per cent this quarter from 1.5 per cent in the previous quarter, which indicates that the consumers are buying smaller packs, However, they are buying more units," the report said. In April-June 2022, small manufacturers, having a turnover of up to Rs 100 crore, showed positive volume growth after three quarters of being in the red.
"Small manufacturers are back on track with positive volume growth 1.8 per cent in Q2'22, from 8.5 per cent in Q1'22 primarily driven by Food (5.6 per cent in Q2'22 from 5.5 per cent in Q1'22)," it said.