FMCG sector stares at bleak year ahead
NielsenIQ predicts sales moderating after two strong years
After two years of robust growth led by higher prices, India’s packaged consumer goods industry may finally catch its breath in 2024, at a time clouds are gathering over the consumption sector.
Makers of soaps to shampoos and biscuits to beverages may grow at 4.5-6.5%invaluetermsthisyear,market researcher NielsenIQ (NIQ) said, sharply lower than 8.4% in 2022 and 9.3% in 2023. Nielsen, which follows a calendar year, did not share its outlook on volumes growth.
In the December quarter, the FMCG industry reported a 6% yearon-year (y-o-y) growth in value terms, driven by a 6.4% rise in volume. However, both volume and value growth fell sequentially during the quarter. The trend was seen in both urban and rural markets, where volumes grew y-o-y but dipped sequentially.
“There is a definite slowdown,” said Krishnarao Buddha, senior category head, marketing at Parle Products. “Both rural and urban markets have slowed down. Errant monsoon
in select geographies due to the El Niño has impacted slowdown in consumption.There is also a normalizing effect post-covid,” Buddha said.
The projected moderation in FMCG growth is in line with the government’s estimate of slower household consumption growth this year. The government estimates private final consumption expenditure, which accounts for 60% of GDP, to grow at 4.4% in the current financial year, down from last fiscal’s 7.5%. Factory output figures too showed that in the April-November period, consumer non-durable sector’s output