Hindustan Times (Noida)

FMCG companies bounce back in Dec quarter: survey

- Suneera Tandon suneera.t@livemint.com

NEW DELHI: Consumers snapped up soaps, hair grooming oil, packaged foods and domestic cleaners in the December quarter as they emerged from the worst of the pandemic, a report by market researcher Nielsen said, driving up the value of fastmoving consumer goods (FMCG) sales by 7.3% from a year ago.

The recovering economy, festive buying and rural revival boosted volumes—across traditiona­l channels and modern trade—by 5% in the period, the Q4 FMCG Snapshot by Nielseniq’s retail intelligen­ce team said on Tuesday. This is the highest volume and value growth reported by the FMCG sector in 2020. FMCG grew steadily for four months, Nielsen said, with value growth rising from 2.7% in September to 9.1% in December. For the whole of 2020, however, value growth declined 2%, in line with its earlier projection­s for the full year. The researcher had projected FMCG sales to shrink between -1% and -3% in 2020, led by the sharp sales contractio­n in the June quarter. Nielsen executives remain hopeful of a positive growth trajectory this year but declined to share projection­s citing local and global uncertaint­y around the virus.

“We are witnessing a fourmonth consecutiv­e growth, and it started from back in September; then in November, when the festive season really picked up, we saw a 9% growth; the best part is that in December, this growth sustained,” said Diptanshu Ray, lead, retail intelligen­ce, India, Nielsen IQ.

As consumers stepped out to shop, India’s large cities with over a million people entered the positive growth territory, reporting a 0.8% growth in sales value in the December quarter, after two quarters of decline, Nielsen said. Meanwhile, rural markets raced ahead as sales value rose 14.2% from a year ago. “This sharper recovery is on the back of favourable agricultur­al sector performanc­e, government action towards rural employment generation, and as rural India had a lesser impact of the pandemic,” Nielsen said.

Cities were more severely impacted by the pandemic, said Sameer Shukla, executive director, retail intelligen­ce, leading to a sluggish recovery.

However, the shift from loose to packaged products in rural markets could help these markets grow ahead of urban in the near-term. Large manufactur­ers, said Nielsen, bounced back with volume-led growth, while smaller companies reported price-led growth and higher volumes.

India’s top packaged consumer goods company Hindustan Unilever Ltd said demand was moving in the right direction after announcing its thirdquart­er earnings last month.

“I’m pleased with the trajectory in which the business is moving, the direction in which the markets are moving. Even before the pandemic, in the 2019 December quarter, markets had slowed significan­tly. The biggest stress those days was rural markets. Rural has seen a pretty good comeback, and over the last couple of quarters, we see rural to be pretty resilient. The urban markets, which took a big toll because of mobility reasons, are coming back to growth, albeit still at a very low level,” Sanjiv Mehta, chairman and managing director, HUL, said in a January 29 interview.

Within FMCG, Nielsen said hygiene and immunity products have found strong salience among consumers and reported a 46% value growth from a year ago, including a 34% volume growth in the quarter. “The home and personal care basket made a consumptio­n-led recovery (5% volume growth versus year ago), while food categories saw a 10% growth riding on boost in consumptio­n as well as a price hike in some food baskets,” Nielsen said.

 ?? BLOOMBERG ?? FMCG grew steadily for four months, Nielsen said, with value growth rising from 2.7% in Sep to 9.1% in Dec.
BLOOMBERG FMCG grew steadily for four months, Nielsen said, with value growth rising from 2.7% in Sep to 9.1% in Dec.

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