FMCG sector to end 2022 with 8-10% value growth: NielsenIQ

Meenakshi Verma Ambwani | Updated on: Aug 02, 2022
In the January-June period this year, the sector witnessed value growth of about 8.4 per cent on account of price hikes due to inflationary pressures

In the January-June period this year, the sector witnessed value growth of about 8.4 per cent on account of price hikes due to inflationary pressures | Photo Credit: KARUNAKARAN M

Urban markets see positive volume growth but rural markets remain in negative territory

The FMCG sector is expected to clock a value growth in the range of 8-10 per cent for 2022 compared to 2021, according to the growth forecast estimates released by research and insights firm NielsenIQ. This is on the back of expectations of a consumption-push in the second half of the year due to festival season and normal monsoon while continued headwinds such as inflationary pressures and other macroeconomic conditions persist.

In 2021, the sector’s value growth was pegged at 17.5 per cent over 2020.

“The second half of the year historically witnesses higher growth rates compared to the first half for the FMCG sector. This is due to factors such as festivals and post-monsoon period spurring consumption. But the growth will continue to be price-led,” Satish Pillai, Managing Director – India, NielsenIQ, told BusinessLine.

Volume decline narrows

In the January-June period this year, the sector witnessed value growth of about 8.4 per cent on account of price hikes due to inflationary pressures. In the June quarter (Q2 CY22), the sector clocked a value growth of 10.9 year-on-year — higher than the 6 per cent y-o-y value growth seen in Q1. Volume growth, too, saw some improvement sequentially. Volume decline narrowed down to -0.7 per cent in Q2 from -4.1 per cent in Q1. Urban markets clocked a positive volume growth of 0.6 per cent but rural markets remained under stress at -2.4 per cent.

“There has been an arrest in volume decline in Q2 beating the last two quarters of consumption decline. This was driven by urban markets moving into a positive trajectory and consumption revival across categories due to a jump in unit growth,” Pillai added. This means consumers continued to prefer smaller packs but also bought a higher number of units. “Unit growth has bounced back to 8.9 per cent in Q2 (1.5 per cent in Q1),” NielsenIQ added.

Category-wise growth

When it comes to categories, the foods segment saw a positive volume growth of 1.8 per cent in Q2 but non-food segment’s volume growth continued to be in negative territory at -6.4 per cent. In food, impulse categories such as volume of salty snacks and chocolates grew by 15.1 per cent. Meanwhile, in non-food categories, the summer season helped deodorants and colognes clock a volume growth of 40 per cent. Other categories that saw positive volume growth include skin creams, coconut oil, hair dyes and talcum powder.

“Modern trade continues to see volume growth (7.8 per cent in Q2 over 5.5 per cent in Q1), while traditional trade is showing signs of recovery (from -4.9 per cent in Q1 to –1.5 per cent in Q2),” the research and insights firm added.

Published on August 02, 2022
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