Rural India reports FMCG consumption growth in March qtr after 6 quarters of decline

The rural market, which contributes around 35 per cent of FMCG sales, sees a revival in volumes with a further drop in price growth, said the FMCG Quarterly Snapshot from NIQ. Overall, the FMCG industry witnessed a volume growth of 3.1 per cent and value growth of 10.1 per cent in the March quarter.

Rural India has reported positive consumption growth in the January-March quarter of 2023 after a gap of six straight quarters, a report by data analytics firm NIQ said. The rural market, which contributes around 35 per cent of FMCG sales, ''sees a revival in volumes'' with a further drop in price growth, said the FMCG Quarterly Snapshot from NIQ. The rural market had a positive consumption growth of 0.3 per cent, which is the ''first time after six quarters'', while the urban markets maintained the momentum with 5.3 per cent, it said. The market previously saw consumption growth in April-June 2021 and had declined in subsequent quarters to the October-December period, 2022. Overall, the FMCG industry witnessed a volume growth of 3.1 per cent and value growth of 10.1 per cent in the March quarter. ''This value growth is driven by a revival in consumption in rural markets and traditional trade which were under duress for more than a year,'' it said. Moreover, during the March quarter price growth for FMCG has also dropped to 6.9 per cent with stabilisation in retail inflation. It was at 7.9 per cent in the December quarter. Continuing the previous trends, food products continue to drive consumption growth with a 4.3 growth, helped by an uptick in the staples. However ''overall Non-Food consumption turns positive (0.2 per cent) after six quarters,'' it added. This was by home care categories, while Personal Care continues to decline. ''Consumers continue to rationalise spending overall within Non-Food in-home care and personal care,'' it said. Besides, traditional trade, which includes neighbourhood and Kirana stores witnessed a consumption growth revival of 1.9 per cent, while Modern Trade (MT) formats such as hypermarts, shopping malls etc retained a double-digit growth of 14.6 per cent, it added. ''The improvement in consumption growth is led by more number of units being consumed, however, shifts towards larger packs is awaited. Urban, Rural & TT see an upward movement in terms of average pack size growth but remain negative,'' said NIQ. While MT continues showing a further decline in average pack size growth, it added. Overall, small manufacturers drive the value and consumption in the food segment with a growth of 7.2 per cent, while the large manufacturers had a 3.2 per cent growth. ''Within Non-Food, however, Large manufacturers drive the growth,'' it said. Over its forecast for the Indian FMCG sector, NIQ said despite global uncertainties, it stands 'tall' with a growth of 7-9 per cent for the full year 2023.