In food, the growth is primarily driven by products falling under the impulse category like salty snacks, chocolates and confectionery and habit-forming such as biscuits, tea, coffee, etc
New Delhi:Â The FMCG industry in India had an overall 8.6 per cent volume growth in September quarter, helped by higher consumption as the inflationary pressure eased, according to a report by data analytics firm NielsenIQ.
With correction in prices, the FMCG industry logged 9 per cent growth in value terms in July-September(Q3), reducing from the preceding quarters, it added.
When inflation was at a record high, the FMCG industry had a high price-led growth in the last 5-6 quarters, though the volume was under stress. However, the trend has started reversing with the cooling of commodity prices.
Besides, the rural market, which has been facing a consumption slowdown for the last several quarters, is showing signs of recovery, while the urban market is maintaining a “stable rate of growth”, said the latest NielsenIQ’s FMCG Quarterly snapshot.
Smaller-sized packs are having higher offtake in the rural market, while in urban markets average pack sizes turn positive, though there is a continued preference towards larger packs, it added.
“The FMCG industry has witnessed a further reduction in price growth from last quarter and has given a necessary impetus to the spending power of the consumer, this is evident in rural markets in particular where there is an uptick in consumption across categories,” said NIQ India Managing Director Satish Pillai.
Overall, factors such as “cooling of inflation in the country fuelled by base effects; a recent decline in unemployment figures, and LPG prices” among others have contributed to the willingness of the consumer to spend, he added.
The consumption growth in FMCG is led by both food and non-food sectors, though food baskets have a higher contribution.
“In Q3 2023, the food sector growth was at a rate of 8.7 per cent compared to the same period last year, up from 8.5 per cent in Q2 2023. Similarly, the non-food sector exhibited growth at a rate of 8.7 per cent in Q3 2023 versus YA, a significant increase from the 5.4 per cent seen in Q2 2023,” it said.
In food, the growth is primarily driven by products falling under the impulse category like salty snacks, chocolates and confectionery and habit-forming such as biscuits, tea, coffee, etc.
Within the non-food categories, this improvement can be attributed to an increase in rural consumption growth, with a growth rate of 6.7 per cent in Q3 2023.
“Volume growth turns positive for the first time in Personal Care categories in Rural. In Urban areas as well, the non-food sector is witnessing an improvement in consumption growth, with a growth rate of 10.4 per cent in Q3 2023, up from 8.9 per cent in Q2 2023,” it said.
The growth in consumption is being propelled by an increase in the number of units sold across rural, traditional trade such as Kirana stores and modern trade such as hypermarts etc.
“Within the retail sector, Modern Trade is experiencing robust double-digit consumption growth at 19.5 per cent. Traditional Trade is also on the rise, with consumption improving to 7.5 per cent in Q3 2023, up from 6.2 per cent in the preceding quarter (Q2 2023),” it said.
Moreover, in the FMCG industry, small manufacturers are experiencing faster growth rates in the Non-Food categories when compared to their large counterparts while for the food category, large players are growing faster in volume than small players.
During their latest quarter results, several listed FMCG players informed about heightened competition which they faced competition from local players, which are back in the segment with their aggressive pricing as the commodity prices soften.
