FMCG growth at 6.6% in March quarter; Rural outpaces urban volume growth for first time in 5 years: NIQ

The FMCG industry saw rural consumption outpace urban consumption in the March quarter (Q1, CY24) after nearly five quarters. As per estimates released by NIQ (NielsenIQ), volume growth of the industry in rural markets was pegged at 7.6 per cent over year ago, while urban volume growth stood at 5.7 per cent.

In the December quarter, rural volume growth was pegged at 5.8 per cent over year ago period but urban volume growth was at 6.9 per cent. This indicates that urban volume growth has seen a decline sequentially.

Overall, the FMCG sector witnessed a value growth of 6.6 per cent at an all India level. This was driven by 6.5 per cent volume growth and 0.1 per cent price growth. The NIQ report added that volume growth for Q1 CY24 has been higher than volume growth in Q1, FY23 (3.1 per cent).

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Roosevelt Dsouza, Head of Customer Success – India at NIQ, said, ”The FMCG industry’s growth continues to be driven by consumption trends in Q1 CY24 (JFM’24), with rural areas surpassing urban growth for the first time in five quarters.”

“Notably, Home and Personal Care (HPC) categories have outperformed food categories. While food categories witness higher unit purchases, the growth in HPC is largely driven by the popularity of larger pack sizes,” he stated. 

Non-Foods

Non-Food categories, witnessed an improvement in volume growth at 11.1 per cent in March quarter over year ago period, which was almost double the growth as compared to Food category. “More units were purchased in Food categories compared to the same period last year, whereas in Non-food, more large packs were bought,” the report noted.

In Q1 FY24, the volume growth in the Food sector stood at 4.8 per cent compared to Q1 CY23. It also witnessed a sequential dip compared to the December quarter (5.3 per cent). NIQ said this was attributed to the slowdown seen in the staples food segment.

In contrast, Non-Food categories, there was an improvement in demand trends with volume growth reaching 11.1 per cent in Q1 CY24 compared to the same period last year. It was also higher compared to the December quarter (9.6 per cent).

“This improvement can be attributed to an increase in rural uptick, with a growth rate of 12.8 per cent in Q1 CY24 (vs. 9.8 per cent in Q4 CY23); led by Personal Care & Home Care categories,” the report added.

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Even in urban regions, non-food categories are witnessing an increase in consumption in the personal care categories (8.4 per cent in Q1 CY24 vs. 5.8 per cent in Q4 CY23).

Meanwhile, Modern Trade channel continued to record strong double-digit volume growth at 14.7 per cent in the March quarter. Traditional Trade (kirana stores) saw “stable growth”, with volumes registering 5.6 per cent growth over previous year. This was a tad higher than the previous quarter (Q4 CY23), “suggesting that traditional retail channels are holding their ground,” the report noted.

Small players

While large players continue to witness strong performance, small players have seen higher volume growth rates in non-food categories in the last two quarters, the report noted. 

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