According to a report, the sector growth of fast-moving consumer goods (FMCG) companies has decreased as stocks continue to increase due to reduced consumption of packaged food by Indians and a decline in daily online grocery demand on digital platforms.
According to the most recent information from top market consulting and intelligence companies Kantar and NielsenIQ, the FMCG industry experienced a decrease in growth to 4 per cent during the April-June quarter (Q1 FY25), down from 12.2 per cent in the previous fiscal year.
The data attributes price reductions, decreased consumption of packaged food during a heat-wave, and slower sales of daily household items and groceries on fast grocery delivery platforms compared to the previous year. The city market has seen no increase in three consecutive quarters and is facing a significant comparison with the Q2 2023 figures. The decline in urban curve along with a solid foundation may limit the figures in the upcoming quarters.
Once more, rural areas showed faster growth than urban areas, and large FMCG companies performed better than smaller ones. Consumption disparities between urban and rural markets are decreasing.
In the Union Budget, Finance Minister Nirmala Sitharaman reduced income tax and raised standard deduction rebate, which is expected to drive growth in the FMCG sector. As per the Kantar FMCG pulse report for Q2, rural India has recovered as a purchaser of FMCG products like soaps and soft drinks.
According to the report, the beginning of 2024 has been excellent for rural areas as they are seeing more growth compared to urban areas; the future is looking positive for rural areas. The government's region-specific initiatives in the recent budget have bolstered development in rural zones, leading to growth.
Even though inflation has reduced to an acceptable rate, it continues to affect the consumer. Looking ahead, the FMCG market in India remains resilient despite challenges and is poised for a 4.5-6.5 per cent growth in FY24, according to a recent Nielsen-IQ ‘FMCG Quarterly Snapshot’.
“The industry’s ability to navigate complexities and adapt to evolving market dynamics underscores its significance in the Indian economy, offering promising opportunities in the future,” the earlier report mentioned.
