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Rural markets outpace urban consumption in FMCG growth for the first time in five quarters: NielsenIQ Report

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In the January-March ’24 quarter, rural markets surpassed urban consumption in the growth of packaged consumer goods for the first time in five quarters, as reported by consumer intelligence firm NielsenIQ (NIQ) in its latest sector update on Tuesday. Urban demand experienced a sequential decline of 5.7% during the quarter, whereas rural markets, essential for overall FMCG growth, exhibited a growth rate of 7.6%.

According to NielsenIQ, the FMCG sector recorded a 6.6% growth in value primarily driven by consumption, with price growth remaining stagnant at 0.1%.

Roosevelt D Souza, Head of Customer Success, India, at NIQ, remarked, “The ongoing growth of the FMCG industry is fueled by consumption trends, marking a significant milestone as rural areas outpace urban growth for the first time in five quarters.”

In terms of volume, or the quantity of units sold, the overall sector experienced a national growth of 6.5% in the January-March ’24 quarter. This marks a notable increase compared to the 3.1% volume growth recorded in the same quarter of the previous year.

Continue Exploring: FMCG firms eye volume growth rebound in FY25 with hopes pinned on lower inflation, favorable monsoon

Non-food sector sales surged by 11%, doubling the growth rate of the food sector, which expanded by 4.8% in terms of volume.

Observing that home and personal care categories (HPC) excelled over foods, D Souza commented, “While food categories experience greater unit purchases, the growth in HPC is predominantly propelled by the increasing popularity of larger pack sizes.”

NielsenIQ reported a consumption slowdown in urban markets and modern trade channels, contrasted by an increase in rural India and traditional trade.

In the retail sector, modern trade maintained robust double-digit volume growth, reaching 14.7%. Conversely, Traditional Trade showcased consistent growth, with volumes increasing by 5.6% in Q1’24, compared to 5.3% in the previous quarter (Q4’23), indicating the resilience of traditional retail channels.

In the expansive FMCG sector, major corporations persistently showcased superior performance in contrast to their smaller counterparts, as highlighted by NIQ. Nonetheless, within the realm of non-food categories, smaller producers have outpaced larger entities in terms of volume growth rates over the past two quarters. This phenomenon could stem from the hurdles smaller players encounter in maintaining price stability within the food sector, whereas non-food categories, witnessing notable price hikes, have enjoyed heightened volume growth.

Continue Exploring: FMCG companies and Kirana stores gear up for summer: Dairy and beverage sales spike across India

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