Urban FMCG sales down 6.3% in Nov

Overall sales of consumer goods in value terms up 10.2% YOY, led by 18% jump in rural biz

Contrary to the buzz suggesting weakness in rural demand, fast-moving consumer goods (FMCG) sales data for November shows that it is the urban demand that is the culprit of being a drag in sales numbers.

FMCG sales (in value terms) in urban India contracted in November as compared with last year as migrant workers, including shop owners, returned home for the festival season, according to data by retail intelligence platform, Bizom.

In November, FMCG sales in urban India fell 6.3 per cent compared with the year-ago month while rural sales were up 17.9 per cent in the same period.

Overall FMCG sales in November increased by 10.2 per cent year-on-year. The decline in urban FMCG sales value is despite companies taking price increases in recent months to offset the pressure arising from higher input costs. Sales of active kirana outlets in urban India were down 5.6 per cent year-on-year. (see chart)

“Post-covid, rural India has been very resilient and has been growing at a fast clip. Urban growth, on the other hand, is still not in line with the precovid growths. It is still on a recovery path and is being driven largely by modern trade and e-commerce,” Mohit Malhotra, chief executive officer at Dabur India, told Business Standard. “Rural is trending well for us on the back of a good monsoon, improved harvest and no rollback of MSPS (minimum support prices of agri crops). MGNREGA enrolment is good and unemployment rates in rural are the lowest at this time,” he said.

These enabling factors are helping rural trend higher, Malhotra said.

However, overall FMCG sales (value terms) fell 14.1 per cent in November compared to October, wherein both urban (down 15.6 per cent) and rural (13.5 per cent) reported a decline.

“Rural FMCG growth remains intact despite all the chatter around slowdown,” Akshay D’souza, chief growth & insight officer at Bizom said.

D’souza explained that shop owners moving out of the city for the festival has impacted transactions at active kirana stores in megacities by over a fifth in November 2021 compared to the year earlier.

Granular data shows the pain in urban region. FMCG sales in megacities with a population of over 5 million has seen a decline of 17.1 per cent in November.