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FMCG sales (MINT_PRINT)
FMCG sales (MINT_PRINT)

Nielsen slashes 2020 growth forecast for FMCG sector again

  • This is the researcher’s third revised estimate for the FMCG industry. The market research firm has downgraded the sector’s forecast multiple times this year as the initial months of the lockdown and restrictions on trade channels dragged down demand for several categories.

NEW DELHI : Research and analytics firm Nielsen on Thursday further slashed its 2020 growth outlook for FMCG industry to -3% from -1%, claiming the headwinds in the economy at large that could stall the sector’s recovery.

In July, Nielsen said the sector may report flat growth in 2020 as covid-induced lockdown in the second quarter of the year battered demand and severely hit trade channels.

This is the researcher’s third revised estimate for the FMCG industry. The market research firm has downgraded the sector’s forecast multiple times this year as the initial months of the lockdown and restrictions on trade channels dragged down demand for several categories. Nielsen follows January-December year.

Nielsen said there is an air of caution when it comes to household consumption and that despite several tailwinds in the economy—such a strong monsoon and government incentives to prop up demand -- the consumer confidence remains low and inflation is high. "Though inflation seems to be inching up, it continues to be on a higher side which will impact the consumer spends," it said in a presentation on Thursday.

However, it did report recovery in the September quarter. The sector reported a 1.6% value growth in third quarter led by significant gains in rural markets as well as channels such as e-commerce holding fort. In the third quarter, recovery was led by packaged staples, health and hygiene categories. However, losses suffered by the sector in the middle of the year derailed growth for the sector for the full year.

For the December quarter, however, it added that festivities could aid demand but shoppers remain cautious. “Last quarter of the year has some of the big festivals across India but with Consumer Confidence Index (RBI) being still very low-caution in the air with respect to spending," the researcher said.

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