Nagaland News Watch

Growth in FMCG trails even as rural areas catch up

<p><strong>MUMBAI:</strong> The FMCG business saw a 6.4% gain in sales volume in the December quarter, which was helped by the rebound in demand in rural areas. In its quarterly estimate released on Tuesday, consumer intelligence firm NielsenIQ said that this corresponds to a 6.1% greater volume rise over the same time last year.</p>
<p><img decoding=”async” class=”alignnone wp-image-389172″ src=”” alt=” growth in fmcg trails even as rural areas catch up 107469652″ width=”1079″ height=”607″ title=”Growth in FMCG trails even as rural areas catch up 6″ srcset=” 400w,×220.jpg 390w,×84.jpg 150w” sizes=”(max-width: 1079px) 100vw, 1079px” /></p>
<p>Consumers in rural markets are beginning to resemble their urban counterparts in terms of demand for bigger packs, which bodes well for a sector that receives a substantial percentage of its growth from these areas.However, the analytics company said that the rise in FMCG consumption has slowed down sequentially, with the fall being especially noticeable in urban areas.<br />
The forecasts for this year don’t appear that promising either. In contrast to the 9.3% increase it had in 2023, NIQ projects the sector will expand between 4.5 and 6.5% in value in 2024. “The industry’s capacity to handle complexity and adjust to changing market conditions is reflected in this prognosis.”Food categories show a reverse trend, while smaller manufacturers are recording higher volume growth rates for non-food categories compared to their larger counterparts,” NIQ researchers said. During Q3 of FY24, the industry’s value increased by 6%.<br />
Volume increase for rural markets fell to 5.8% during the quarter from 6.4% the previous one. Urban areas had a more marked slowdown in consumption growth, with volume growth falling to 6.8% from 10.2% in the September quarter. In Q2 FY24, overall volume increase was 8.6%.<br />
“Although there was a decrease in the next quarter, the story of the rural recovery kept changing all year long. We see an increase in consumption in Q4 2023, mostly due to habit-forming food categories (like biscuits and noodles) and necessary home goods. The favorable interim budget, which supports various rural sector economic boosters, should bode well for businesses that have a rural strategy, according to Roosevelt D’souza, head of customer success (India) at NIQ.<br />
The top 75 cities with a population of five lakh or more, according to retail analytics platform Bizom, account for around 40% of the FMCG industry’s earnings; the remaining 60% come from what is considered rural India. In important farming states, insufficient monsoon rains had a negative effect on rural incomes, which reduced demand. According to FMCG executives, the future development trajectory of the business would be largely determined by the rise of rural income and the harvests of winter crops.<br />
Tepid urban consumption may have resulted from a muted holiday season that failed to generate significant consumption of discretionary goods and a delayed start to winter that affected spending in the personal care category, according to Akshay D’souza, head of growth and analytics at Bizom. According to NIQ, the rise in consumption of non-food items in metropolitan areas has slowed down in Q3 FY24.</p>