New Delhi: India’s fast-moving consumer goods (FMCG) sector reported a 5.4% rise in September-quarter volumes, which moderated sequentially on account of the transition to new goods and services tax rates, while the value of sales jumped 12.9%, according to data released by consumer intelligence platform NielsenIQ.
New Delhi: India's fast-moving consumer goods (FMCG) sector reported a 5.4% rise in September-quarter volumes, which moderated sequentially on account of the transition to new goods and services tax rates, while the value of sales jumped 12.9%, according to data released by consumer intelligence platform NielsenIQ.
The rural markets, which account for 38% of FMCG volumes, grew faster than the urban areas for the seventh consecutive quarter. Urban volumes reported a sequential slowdown.
The FMCG sector recorded a 7.1% increase in pricing-led growth, with unit growth outpacing overall volume growth—indicating a consumer preference for smaller packs. FMCG volumes grew 6% in the June quarter.
"The Indian FMCG sector continues to demonstrate resilience, with rural markets leading the charge for seven consecutive quarters," said Sharang Pant, head of customer success, FMCG, at NielsenIQ in India. "While urban recovery is gaining traction, particularly in smaller towns, rural demand remains the cornerstone of volume expansion. E-commerce continues to be a key growth engine, especially in the top eight metros."
With inflation easing, the outlook for consumption remains optimistic and the impact of GST changes on consumption is expected in the next two quarters, he added.
The September quarter was marked by the transition to revised GST rates, which led to temporary de-stocking in trade as companies moved to pass on the benefits of lower prices to consumers. This led to delayed purchases by consumers.
As a result, most companies reported GST-linked disruptions during the quarter. Mumbai-based Hindustan Unilever Ltd reported flattish volume growth. Dabur India's quarterly volumes rose 2%, with consolidated revenue up 5% year-on-year.
There was a 7.7% year-on-year increase in volumes in the rural markets compared with a 3.7% growth in the urban areas, NielsenIQ said. The urban markets had reported volume growth of 4.1% in the June quarter. Rural growth moderated from 8.4% in the previous quarter.
Revival trajectory
"This recuperation is primarily driven by smaller urban towns. Metropolitan areas continue to experience a decline in offline sales owing to a shift towards e-commerce. However, modern trade is on a revival trajectory as well," NielsenIQ said in a report on Monday.
Demand for food remained largely stable at 5.4% in the September quarter, driven by increased volumes in staples (rice, flour, spices) and a decline in volumes in impulse and habit-forming categories (snacks and ready-to-cook). Home and personal care volume growth slowed to 5.5% year-on-year.
Most categories reported a dip in September-quarter volumes. Another factor contributing to this slowdown is the drop in the number of consumers in a category, who either switched to cheaper options or postponed their purchases.
The expansion of small manufacturers continued to drive FMCG consumption during the quarter, supported by steady volume growth across both food and home and personal care categories. In contrast, large players saw a slowdown in consumption.
Over-the-counter categories posted a 14.8% increase in value sales, driven by a 9.7% rise in prices. Volumes grew 4.8%.
The share of e-commerce inched up further by 1% across the top metros.
"Omnichannel volume growth remains driven by e-commerce, with modern trade also contributing this quarter. However, a marginal softening in e-commerce volume growth is observed in the September quarter," NielsenIQ said.