Fmcg News: FMCG demand slows in rural India for third successive quarter in January-March: Nielsen

Rural markets slowed down for packaged goods for the third successive quarter in the January-March quarter, and consumers switched to smaller packs amid steep inflation, research firm NielsenIQ said in its quarterly update on fast moving consumer goods.

The quarter witnessed 6% growth for FMCG over last year led by double digit price growth, and consequently negative volume growth. This, NielsenIQ said, is similar to the last quarter.

The decline in consumption is visible across all zones and town classes, but more prominent in rural markets, which saw a 5.3% drop – the highest consumption slowdown in the last three quarters. The south and north India zones witnessed more than 5% volume decline.

Rural markets witnessed price increases which were higher than urban markets, at 11.9% compared to 8.8% in urban India in the quarter, and hence there was more stress on consumption decline. NielsenIQ also flagged an increase in the exit of small manufacturers in the January-March quarter due to high input cost pressures, and not being able to pass on the costs to the consumers.

“In continuation from last year, macro-economic indicators are still guiding consumption patterns for the Indian consumer, and they are feeling the impact of the price increase -especially in the food and essentials categories,” said Satish Pillai, managing director at NielsenIQ.

“Although global macro factors persist, the impetus by the government, if supported by the normal monsoon in the country, would be encouraging. Within this environment, retail trade continues to be optimistic, and traditional trade shopkeepers have maintained stock levels, as well as assortment,” he added.

Modern trade stabilised in recent quarters, with volume growth on the uptick at 5.3% in the quarter versus year-ago. Traditional trade saw –4.9% volume degrowth, led by shift towards smaller packs.