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Business News/ News / India/  FMCG growth up in Sep qtr, signs of rural recovery seen
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FMCG growth up in Sep qtr, signs of rural recovery seen

Rural markets reported a 6.4% jump in quarterly volumes after reporting a 3.6% decline in the year earlier. Fast-moving consumer goods (FMCG) volumes in urban markets increased 10.2% from a year earlier.

In volume terms, sales gained 8.6% in the quarter after dropping 0.6% in the year-ago period, NIQ said on Tuesday. Premium
In volume terms, sales gained 8.6% in the quarter after dropping 0.6% in the year-ago period, NIQ said on Tuesday.

New Delhi: Packaged consumer goods sales rose 9% in value in the September quarter, led by increased demand for savoury snacks and biscuits, along with stronger demand for personal care products in rural markets, according to market researcher NielsenIQ (NIQ).

In volume terms, sales gained 8.6% in the quarter after dropping 0.6% in the year-ago period, NIQ said on Tuesday. Rural markets reported a 6.4% jump in quarterly volumes after reporting a 3.6% decline in the year earlier. Fast-moving consumer goods (FMCG) volumes in urban markets increased 10.2% from a year earlier. Rural markets are showing signs of recovery, with consumption picking up during this quarter from the year-ago period. Meanwhile, urban markets are maintaining a stable rate of consumption growth, NIQ said.

After several quarters of sharp price hikes, the last several months saw price cuts as inflationary pressures cooled. For instance, several companies reduced prices across edible oil, hair oils, skin cleansing laundry, soaps, and detergents.

High inflation also adversely affected household consumption, as consumers, especially in rural markets, cut spending. In September, retail inflation cooled to a three-month on the back of lower vegetable prices. This has helped households buy more packaged goods, NIQ said.

“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 the rural markets in particular, where there is an uptick in consumption across categories. Overall, cooling of inflation in the country fuelled by base effects, a recent decline in unemployment figures, and LPG prices, among other factors, have contributed to the willingness of the consumer to spend," said Satish Pillai, managing director of NIQ India.

India is in the midst of festivities that see households spend on everything from appliances to cars to new clothes and gifts. In their recently concluded earnings update, consumer goods companies expect improved demand trends in the second half of the fiscal helped by slower inflation and government spending ahead of the general elections.

At an all-India level, both the food and non-food categories contributed to the growth in consumption. In the third quarter of 2023, the food sector grew 8.7% year-on-year. Similarly, the non-foods sector exhibited growth of 8.7% from a year earlier in the same period. This growth is primarily driven by products falling under impulse categories such as salty snacks, chocolates and confectionery, apart from biscuits, tea and coffee, NIQ said.

“Impulse food categories continue to exhibit strong growth, and we see a growth recovery in habit-forming categories such as biscuits, tea, noodles, coffee, etc., after five quarters. An increase in consumer spending on discretionary categories such as personal care and home care products suggests that rural consumers are beginning to spend beyond essential categories. This change in spending could be attributed to easing inflationary pressures. This renewed optimism across the country augurs well for the festive season," said Roosevelt D’souza, lead, customer success, NIQ India.

NIQ pointed to improved demand within the non-food categories, which grew 8.7% during the quarter, improving sequentially from the preceding three months.

NIQ attributed this to an improvement in rural volumes. “Volume growth turns positive for the first time in personal care categories in rural. In urban areas as well, the non-food sector witnessed an improvement in consumption (volume) growth, with a growth rate of 10.4%, up from 8.9% in the June quarter. Consumption is being propelled by an increase in the number of units sold across rural, traditional, and modern trade," it said.

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 07 Nov 2023, 11:20 PM IST
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