Rural distress continues to hit consumer spending in the hinterland2 min read . Updated: 26 Jul 2019, 12:28 AM IST
- Consumers in rural India go easy on buying staples such as atta, salt, cooking oils and household goods, says report
- For the 12 months ended 31 May, FMCG volumes in rural India fell 2% while urban volumes fell 1%
Rural shoppers continued to shy away from spending more on household staples and homecare goods leading to a drop in sales volume of fast-moving consumer goods (FMCG) in India’s hinterland for the 12 months ended 31 May, showed data from research firm Kantar Worldpanel.
Rural households went easy on buying staples such as atta (wheat flour), salt, cooking oils, and household care goods such as washing powders as a slowdown in these two categories dragged down volume growth. For the 12 months ended 31 May, FMCG volumes in rural India fell 2% while urban volumes fell 1%. However, categories such as personal care, packaged foods and beverages continued to grow.
Kantar tracks consumption at a household level and covers both branded and unbranded households goods in over 90 FMCG categories.
An underlying rural distress linked to a drop in non-farm employment and a weak monsoon was impacting sales of staples in the hinterland, said a top executive at Kantar.
“There is a good part of rural India that has come under water stress (lack of rains) and when there is water stress it tends to affect a lot of categories in FMCG," said K. Ramakrishnan, managing director, Worldpanel Division, South Asia, Kantar. Among other factors impacting rural demand for consumer goods is non-farm employment, Ramakrishnan said.
“That is a big one and non-farm employment growth has come down in the current scenario and that’s another factor driving down growth in rural areas."
Ramakrishnan, however, added that April onwards there had been a slight uptick in demand for FMCG goods in rural India. “From a quarterly perspective, we are beginning to see some positivity in demand," he said.
Interestingly, rural shoppers traded off frequently purchased categories such as atta, salt, cooking oils, and washing powders to accommodate other categories such as talcs, toilet cleaners, hair colours, and noodles that saw a healthy growth in household penetration during the same period. As a result for the 12-month period ended May, rural consumers spent an average of ₹3,134 on monthly FMCG purchases, marginally lower than what they spent in the preceding 12 months. However, they bought into more categories, Kantar said, showing an increasing amount of experimentation among rural households.
The share of consumers buying more than 20 categories rose from 15% in 2017-18 to 22% in 2018-19.
Despite the slowdown in rural markets, its fundamentals are strong as reflected in the near 50% jump in households that have bought more than 20 categories in a year, according to Kantar.