January-March 2024 added buoyancy to the Indian FMCG industry, registering a 6.5 percent growth in volume terms at the pan-Indian level, per consumer intelligence firm NielsenIQ. The reported quarter saw an uptick of 3.4 percent from 3.1 percent last year at the same time.
Another novelty is that rural consumption engulfed urban consumption for the first time in five quarters.
The FMCG industry clocked 6.6 percent growth in value terms, all thanks to a 6.5 percent increase in volume at the national level.
Rural demand surged 7.6 percent in the first quarter of CY24, whereas the urban market rose 5.7 percent year-on-year in demand, tumbling down from a 6.9 percent increase in the December quarter.
Both food and non-food sectors contributed to the consumption growth in the March quarter of 2024, but non-food doubled up in growth against food, NielsenIQ (NIQ) said in its quarterly snapshot for the March quarter of 2024.’
“More units were purchased in food categories compared to the same period last year, whereas in non-food, more large packs were bought,” it said.
In Q1 2024, the food sector volume growth was 4.8 percent YoY, but lower than 5.3 percent QoQ, on the foot of products falling under staples.
On the other hand, non-food categories showed improvement in consumption at 11.1 percent in Q1 2024 YoY, up from 9.6 percent in Q4 2023.
“This improvement can be attributed to an increase in the rural uptick, with a growth rate of 12.8 percent in Q1 2024 (versus 9.8 percent in Q4 2023); led by personal care & home care categories,” it said.
In urban areas, the non-food sector was exuberant on the back of the growing personal care segment at 8.4 percent in Q1 2024 versus 5.8 percent in Q4 2023.
NIQ Head of Customer Success India, Roosevelt D’souza, said, “The FMCG industry’s growth continues to be driven by consumption trends in Q12024 with rural areas surpassing urban growth for the first time in five quarters.” The home and personal care (HPC) categories exceeded the food categories in performance.
The quarterly snapshot underscored the sluggish consumption growth in urban and modern trade while rural and traditional trade flourished.
“Rural consumption growth has gradually picked up pace and has surpassed urban (growth) in Q12024. Urban sees sequential decline in consumer demand leading to 5.7 percent this quarter,” NIQ said.
Within the retail sector, modern trade recorded strong teen volume growth at 14.7 percent.
Traditional trade had a volume growth of 5.6 percent growth in Q1 2024 against 5.3 percent in the December quarter of 2023.
NIQ talked about the continuity of vigorous performance by large players compared to small players within the FMCG industry. However, smaller manufacturers witnessed animated volume growth rates in non-food categories over the last two quarters against large companies.
“This might be because smaller players face challenges in keeping prices stable in the food sector, while non-food categories, with significant price increases, have experienced higher volume growth,” it said.
Godrej Consumer Products saw similar growth in urban and rural areas in the March quarter, while Dabur saw its rural demand outshined urban demand due to its expanding expansion in the villages. At the same time, Hindustan Unilever has set its outlook for its rural consumption growth in volume at high single digits.