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Data and insights firm, Kantar, expects cautious spending patterns to continue in 2023 as consumers are expected to continue to stick to essential categories, including groceries and fresh produce. The snacks and home hygiene segments are expected to witness a slowdown.
According to Kantar’s latest report, the FMCG sector’s volume grew by just 0.54 per cent in the 12-month period ended January 2023, compared to the year-ago period.
In-home snacking
The report indicated that the snacking segment which witnessed a boom in the past three years due to the rise of in-home consumption, had begun witnessing a slowdown. “The monthly growth (snacking) that was at 13.4 per cent in February 2022 was at 6.9 per cent in January this year. 2023 will be the year where in-home snacking could slow down. We don’t really see it turning negative, but sub-3 per cent growth is likely to be seen in the sector,” stated the data and insights firm, which tracks household consumption.
The home hygiene segment witnessed a mere 0.6 per cent growth in the 12-month period ended January 2023. “The only performing category in the sector is utensil cleaners — other surface cleaners’ categories are having a rough time; and their rough times are expected to continue into 2023 though with a slight improvement over 2022,” the report noted.
With inflation in India oscillating between 6 per cent and 7 per cent in the past few months, the report said consumers are expected to continue to spend on essential categories but discretionary and convenience foods are at the risk of getting dropped out of their monthly wallet.
Inflationary risk
“Consumers will continue to spend on these categories — grocery and daily essentials, such as toothpaste, shampoo and soap. They are likely to manage their budget by moving to cheaper brands. However, discretionary products like convenience goods have a risk of getting dropped out,” the report said. If prices go further up, nearly one-fifth of consumers may stop spending on categories such as packaged juices, soups, ketchup, entertainment and eating out, Kantar said.
The consumption slowdown has been led by subdued rural demand in the past few quarters. “Much is dependent on the rabi harvest. Keeping that in mind, we are expecting to see rural areas make a recovery in the first half of the year, but the second half might still be bumpy for the region,” the report noted.
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