India’s fast-moving consumer goods (FMCG) sector achieved a 7.5% growth by volumes in the April-June 2023 quarter, as highlighted in the latest quarterly report by researcher NielsenIQ. This growth, the highest recorded in the past eight quarters, was propelled by the revival in rural India and the amplified expansion of modern trade.
In terms of value, the sector expanded by 12.2% during the quarter, indicating a 1.3% increase compared to the corresponding period in the previous year. The driving force behind this growth was the heightened consumption expansion, as pointed out by the research entity. This resurgence marks a significant shift, occurring two years subsequent to a phase where the industry had undergone price-driven growth due to the impact of elevated inflation.
NielsenIQ highlighted a noteworthy trend in rural markets, where volumes experienced a 4% year-on-year growth. This stands in contrast to the stagnant 0.3% growth witnessed in the previous quarter and the decline of 2.4% observed in the same quarter of the preceding year. Urban markets, on the other hand, sustained their momentum, achieving a remarkable consumption growth rate of 10.2%, which is double the 5.3% growth witnessed in the previous quarter.
“The quarter (April-June) is thus far the best quarter in a year and a half, with positive strides across all growth vectors we track. Recovery in rural markets, which was in negative territory for the last few quarters, is primarily driven by non-food,” Roosevelt D’Souza, lead, customer success, Nilesen IQ, said in a statement. “This combined with a 21% growth in modern trade augurs well for the upcoming festive seasons.”
According to NielsenIQ, the foods category experienced a volumetric expansion of 8.5% during the quarter, primarily propelled by the staples and impulse segments. In contrast, non-food categories observed a growth rate of 5.4%, a significant increase from the mere 0.2% recorded in the preceding quarter.
The researcher indicated that modern trade sustained its double-digit surge in consumption, with a growth of 21.1%. Meanwhile, traditional trade also demonstrated notable progress, expanding by 6.2% during the quarter. This stands in stark contrast to the 1.9% growth observed in the preceding quarter.
“The softening of India’s inflation rate and the decline in food inflation is good news for the industry. This has led to confidence in spending reflected in retail channels across the country,” said Satish Pillai, MD of NielsenIQ.
