New report expects India's FMCG growth to be subdued in 2019

India's fast moving consumer goods (FMCG) industry is likely to grow at a slower pace at 11-12 per cent in 2019, almost 2 per cent lower than that in 2018, says a report. The industry is also expected to grow at 12-13 per cent during the April to June quarter of the calendar year 2019, according to Nielsen.

"In line with the FMCG growth forecast for Q1 2019 at 13-14 per cent, this sector grew at 13.6 per cent. We are witnessing a softening of growth by 1-2 per cent sequentially every quarter leading to healthy double-digit growth in the first half of the year followed by high single-digit growth in the second half of the year," Nielsen said. Nielsen maintained that the FMCG industry growth outlook will be in the range of 11-12 per cent in 2019, almost 2 per cent lower than that in 2018.

The volume growth which peaked in 2018 to 11 per cent is expected to be healthy but lower at 8.5- 9.5 per cent in FY19, it added. It noted that the 13.6 per cent growth in the first quarter is slightly lower than the last quarter of 2018 (-2.3 per cent from the previous quarter).

"Similar sentiments are witnessed in the economy with a 6.6 per cent GDP growth in the December quarter of 2018 against an expected 6.8 per cent. Inflationary pressure is also seen mounting in recent months from 2 per cent in January 2019 to 2.9 per cent in March 2019," it added. "While the slight drop is witnessed in urban growth, there is a significant softening of growth trends in rural which is dampening the overall FMCG industry growth from the third quarter of 2018 to first quarter of 2019.

Historically, rural has grown 3-5 per cent points faster than urban and the recent slowdown in rural growth has brought the growth closer to urban growth. "The overall drop witnessed in rural growth is majorly driven by a slow down in packaged food category," it noted.

(With inputs from agencies.)