The fast-moving consumer goods (FMCG) sector in India experienced a 6% growth in value and a 6.4% growth in volume during the October-December quarter, reflecting a year-on-year increase in demand nationwide.
According to NielsenIQ‘s quarterly update, volume growth for the quarter increased by 6.1% compared to the same period last year. Additionally, in 2023, the consumption gap between urban and rural markets narrowed for the first time, as reported by the researcher.
NielsenIQ forecasts a growth of 4.5-6.5% for the FMCG market in FY24, indicating the industry’s adeptness in navigating complexities and adjusting to changing market dynamics.
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Roosevelt Dsouza, head of customer success – India, NielsenIQ said, “The favourable interim Union Budget 2024-25, and several economic boosters for the rural sector, should augur well for companies with a rural strategy.”
Rural markets experienced a growth of 5.8%, whereas urban markets saw a higher growth of 6.8%. However, in sequential terms, rural markets exhibited a volume slowdown. India’s villages account for more than a third of the yearly sales of FMCG companies, underscoring their significance in revitalizing the sector.
Consumption in non-food categories surged by 8.7%, outpacing the growth in food categories, which stood at 3.8%.
Although experiencing a decrease in sequential quarters, the narrative of rural recovery continued to progress steadily throughout the year. In the fourth quarter of 2023, there was an increase in consumption, predominantly propelled by habit-forming categories like biscuits and noodles in food, along with essential home products.
“These categories have thrived despite flat to negative price growth, indicating resilience and sustained demand,” the researcher said.
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Modern trade continued to sustain robust double-digit growth at 16.8%, while Traditional Trade witnessed a decline, posting a growth rate of 5.3% in the quarter, down from 7.5% in the previous quarter.
“Despite certain challenges, the positive momentum in modern trade adds a promising dimension to the overall market scenario,” the researcher said.
In urban markets, average pack sizes continue to show a positive trend, albeit with a consistent preference for larger packs. Conversely, in rural areas, there’s an emerging inclination towards larger pack sizes, indicating a path of recovery.
According to NielsenIQ, smaller manufacturers are experiencing greater volume growth rates in non-food categories compared to larger manufacturers, while the trend reverses in food categories.
