Fast-moving relief: FMCG clocks higher growth rates in Q1 both in volume and value terms

The fast-moving consumer goods (FMCH) in the country, according to NIQ India report, expanded 12.2% in value terms in the April-June quarter of the current financial year, clocking a rate higher both in sequential and year-on-year terms and triggering a signal that the declining inflation during that period provided some relief to the common man’s stressed pocket.
Volume growth was, however, a bit muted in comparison. It stood at 7.5% that was reckoned by the agency as the highest in the past eight quarters.
It also stoked optimism for a further rise in consumption during the festive months in the next quarter.
What’s perhaps more significant is that the rural sector that is showing stress on a few parameters displayed a rise in consumption registering a 4% volume growth vis-à-vis 0.3% in the January-March quarter. Compared to the contraction of 2.4% in the April-June quarter in 2022, the growth was heartening in the rural sector.
Among all the sectors sales of which are keenly watched FMCG ranks towards the top. The reason is, it provides useful indicators of the amount of money left for discretionary spending on the next tier of goods after satiating the need for essential items among a very large section of the country’s citizens.
The growth in the urban sectors was more impressive. City dwellers consumed FMCG items rapidly delivering a volume growth of 10.2%, a rate nearly double of that of the 5.3% growth seen in the January-March quarter.
NIQ India hailed the April-June growth rates as the highest in the past year and a half.
“The softening of India’s inflationary rate and decline in food inflation is good news for the industry. This has led to a confidence in spending reflected in retail channels across the country that are growing,” said Satish Pillai, MD, NIQ India.
“Q2 of 2023 is the best quarter in a year and a half, with positive strides across all growth vectors we track. Recovery in rural markets…combined with a 21% plus growth in modern trade, augurs well for the upcoming festive seasons,” said Roosevelt D’Souza, lead, customer success, NIQ India.
Pillai too thought that the trend could lead to higher growth during the upcoming festive season.
The consumption in the sector was driven by food items that enjoyed a 8.5% volume growth compared to the same period in 2022.
However, the report also flagged a decline in the consumption of personal care category products in the rural regions.
However, in urban regions non-food items registered a volume growth of 8.9% in the April-June quarter compared to 3.9% growth in January-March quarter.
Modern channels of trade were reported to register 6.2% growth in April-June period vis-à-vis 1.9% in January-March.
“Recovery in rural markets which was in negative territory for the last few quarters, is primarily driven by the non-foods segment. This combined with a 2.1% plus growth in modern trade augurs well for the upcoming festive season,” added D’Souza.