The FMCG industry is expected to garner a value growth of 4.5 per cent to 6.5 per cent in 2024 as per the latest projections by NielsenIQ. This growth projection is nearly half of the value growth of 9.3 per cent recorded by the industry in the 12-month period ended December (MAT Dec’23). The insights and research firm said the growth projections take into account external factors but also reflects the industry’s ability to navigate complexities and adapt to evolving market dynamics.

In the December quarter, the FMCG industry garnered a 6 per cent value on the back of 6.4 per cent volume growth (6.1 per cent higher y-o-y). Rural markets volume growth in Q4 was pegged at 5.8 per cent compared to the year-ago period, while the volume growth in urban markets was pegged at 6.8 per cent compared to year-ago period.

Roosevelt Dsouza, Head of Customer Success – India, NIQ, said, “For the first time in 2023, consumption gaps between urban and rural markets are narrowing down. The North and West regions are contributing to this phenomenon. The favourable interim Union Budget 2024-25, supporting several economic boosters for the rural sector, should augur well for companies with a rural strategy.”

However, the report also noted moderation in consumption growth for the FMCG sector compared to the sequential quarters in both rural and urban markets. “In rural markets, there is a sequential slowdown in volume growth, with consumption experiencing a slight decline during Q4’23 compared to Q3’23 (6.4 per cent). However, the decline is more pronounced in urban markets(10.2 per cent in Q3 vs 6.8 per cent in Q4),” NIQ noted.

“Despite a sequential-quarter decline, the rural recovery narrative continued to evolve throughout the year. In Q4 2023, we observe an uptick in consumption, primarily driven by habit-forming categories (such as biscuits and noodles) in food and essential home products. These categories have thrived despite flat to negative price growth, indicating resilience and sustained demand,” Dsouza said.

At the All-India level, both the food and non-food sectors contributed to the volume growth of the FMCG sector. The food sector’s volume growth in Q4 was pegged at 5.3 per cent compared to year ago period but was down from 8.7 per cent compared to Q3.. This was due to a slowdown in growth is staples and impulse categories, it added.

Within the non-food categories, there was an improvement, with volume growth reaching 9.6 per cent in Q4 year-on-year, an increase from the 8.7 per cent recorded in Q3. This improvement was driven by an increase in rural consumption growth but saw lower consumption levels in urban areas.

Within the retail sector, modern Trade continued to experience double-digit consumption growth (16.8 per cent) but traditiona trade growth rates were stressed (5.3 per cent in Q4 vs 7.5 per cent in Q3).