Home >Industry >Retail >FMCG demand is back to near pre-covid level

Demand for packaged consumer goods recovered to near pre-covid levels in June as shops reopened after the government eased lockdown measures and the return of millions of migrants to their villages boosted rural consumption, market researcher Nielsen said.

“June saw a clear but slowish recovery," said Prasun Basu, president, South Asia zone, Nielsen Global Connect. “We are kind of coming back to the levels that we left behind at the end of last year."

Sales of consumer goods witnessed a sharp decline in April and May as markets remained closed and many households had stockpiled provisions in March in anticipation of the government imposing a national lockdown.

Source Nielsen
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Source Nielsen

While spending on fast-moving consumer goods (FMCG) rose in June, India’s recovery was delayed in comparison with other Asian markets, Nielsen said.

Rural recovery outpaced that of urban areas as the reverse migration of workers and an above-normal monsoon boosted sales of packaged goods.

Nielsen did not share the percentage growth numbers for June but said the average monthly FMCG value sales in the pre-covid period of December to February was taken as the baseline.

The market researcher looked at data during four different periods: the baseline period of December to February; the pre-covid period of March; the April-May lockdown; and June, when the lockdown measures were eased.

With the baseline indexed at 100, FMCG sales were at 98 for June; in May, they dipped to 75. In comparison, the pre-covid or March sales were at 101 as shoppers filled their grocery baskets fearing shop closures. In rural markets, sales were sharply ahead at 109 in June.

“After a significant impact during the lockdown, the FMCG industry in India has recovered sharply in June—a recovery that is driven by traditional trade channels. There was a clear prioritization on FMCG categories made by consumers during the lockdown period, and significant recovery of others with Unlock 1.0 in June," Nielsen said.

Between January and May, value sales of FMCG in India dropped as much as 8% on a year-on-year basis, the steepest fall in consumer packaged goods seen in key markets of Asia.

However, the trends were varied across segments.

Within essentials, packaged wheat flour and retail packs of edible oil brands grew well as consumers turned to home-cooked food, driving sales of staples. On Friday, packaged foods company Britannia reported a 26% jump in consolidated revenue for the June quarter, buoyed by demand for its cookies as Indians snacked more as they remained indoors.

“These categories continue to be in the shoppers’ basket in Unlock 1.0 as consumers continue to be cautious. Moreover, soaps and floor cleaners continued to be in shoppers’ priority and command a higher share of wallet in the unlock phase," said Nielsen’s findings.

While home and personal hygiene categories, along with packaged foods, saw heightened consumption throughout the lockdown, it was personal care that showed a steady recovery.

With a majority of people confined to homes, cosmetics and beauty categories were de-prioritized in the lockdown phase—categories such as deodorants, hair colour and skin care had witnessed a significant slowdown. These categories have witnessed a sharp bounce-back in June, the researcher said.

“Non-food saw a big recovery in June over May, and that is showing up both in urban and rural," said Basu. “We are coming back to the levels we left behind at the end of last year/beginning of this year."

Consumers want to go back to using their daily skincare and beauty products. “While the full recovery of the beauty segment can’t be called out, we are seeing the delta is very strong there between May and June", he added.

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