Economy

FMCG sector clocks 7.3% growth in December quarter

Meenakshi Verma Ambwani New Delhi | Updated on February 16, 2021

Metro cities see recovery, rural witnesses sustained double-digit growth, says Nielsen IQ

Strong double-digit growth in rural India and significant recovery in large cities helped the fast-moving consumer goods sector record 7.3 per cent value growth in the October-December 2020 quarter, according to data analytics company NielsenIQ.

This growth in traditional trade, modern trade and e-commerce was led by strong demand for food as well as non-food discretionary categories. However, overall, the FMCG sector ended 2020 with a de-growth of -2 per cent, in line with the research and insights firm’s earlier forecast.

Diptanshu Ray, Lead, Retail Intelligence, India, NielsenIQ, said: “After witnessing challenging times in the early part of 2020, the FMCG sector witnessed a consumption-led recovery, leading to a positive growth trajectory, consecutively in the last four months. In fact, the growth accelerated in November during the festival period and sustained even in December. So, we do anticipate the industry will see positive growth in 2021. But we are not yet out of the pandemic crisis globally, so we are keeping a close watch, and it will be difficult to give a forecast for this year right now.”

While in September the sector witnessed a value growth of 2.7 per cent, it increased to 3.8 per cent in October and further to 9 per cent in November and 9.1 per cent in December.

Urban recovery

What was encouraging was signs of recovery in metro cities with a population of more than a million people. After witnessing a de-growth of nearly -7 per cent in July-September quarter, metro cities were back to positive growth trajectory of 0.8 per cent value growth in the December 2020 quarter compared with the same period last year.

Sameer Shukla, Executive Director, Retail Intelligence, India, NielsenIQ, said metros were severely impacted due to the pandemic and the fact that metro cities got back to positive growth even on a strong base of the pre-pandemic period of October-December 2019 was significant.

Meanwhile, rural regions sustained a double-digit growth trajectory, which accelerated to 14.2 per cent value growth in the December quarter, compared with the same period last year. Ray said this sharper recovery was on the back of favourable agricultural sector performance, government action towards rural employment generation, as well as lesser impact of the pandemic on rural India.

Home and personal care

The home and personal care category made a strong consumption- led recovery in the December quarter with a volume growth of 5 per cent compared with the year-ago period. Hygiene and immunity-building categories continued to witness high value growth of 46 per cent over the corresponding quarter in the previous year.

At the same time, food categories saw a 10 per cent growth on the back of a boost in consumption as well as price increase in some categories. Staples, including edible oils, and packaged atta and rice, alone grew by as much as 18 per cent in the December quarter versus a year ago period, the report added.

Large manufacturers

After two quarters of decline, large manufacturers with annual sales of more than ₹600 crore also bounced back to positive growth trajectory with a “healthy 5 per cent value growth led by 4 per cent rise in consumption volume.”

Shukla added that higher dependence on rural India and staples foods enabled small FMCG players, with an annual turnover of ₹100 crore, to clock a value growth of 16 percent in the December quarter over the year-ago period.

While modern trade channel posted a strong recovery, traditional trade channels continued their growth momentum in the December quarter and e-commerce stabilised at a consumption level higher than pre-Covid levels, NielsenIQ added.

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Published on February 16, 2021
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