FMCG value growth declined 34% in April due to lockdown: Nielsen

Our Bureau New Delhi | Updated on May 23, 2020

The FMCG industry recorded a 34 per cent drop in value growth in April 2020 compared to the same period last year due to the nation-wide lockdown. According to research and insights firm Nielsen, the decline was due to a sharp drop in sales clocked by traditional trade channel consisting of neighbourhood and kirana stores.

Traditional trade value growth declined by as much 38 per cent in April as compared to the same period last year, while modern trade value growth continued to witness value growth (5 per cent).

“The sharp de-growth of traditional trade channels can be attributed to area and shop closures. On an average, a traditional retail shop had to close for 12 days in April due to various restrictions,” Nielsen added. On an average, while grocers had to shut down for eight days and chemists had to shut down for four days, other traditional trades such as paan-shops and cosmetic shops had to shut down for a significantly higher number of days.

Supply constraints and removal of promotional discounts by retailers and brands also led consumers to shell out more on packaged products during the March 23-May 3 period. “Average prices for key foods categories witnessed an increase in the lockdown phase. This was caused by retailer-led promotions slowing down, and change in brand and pack mixes,” said Prasun Basu, South Asia Zone President of Nielsen Global Connect.

In modern trade stores, the average price of packaged ghee grew by 18 per cent during lockdown Phase 1 and 19 per cent in Phase 2, compared to the year-ago period. Similarly, average prices of packaged atta grew by 9 per cent and 12 per cent compared to the year-ago period in the first and second lockdown phases respectively. Surge in average prices was also seen in categories such as soft drinks, edible oils and packaged tea.

At the same time, contribution of private label brands increased across many categories in the lockdown phase as retailers leveraged on private labels to fill gaps in supplies caused by supply disruptions. “The value share of private label brands increased by 5-6 percentage points during lockdown as compared to the pre-Covid period of Dec-Jan-Feb period,” Nielsen added.

Some of the other key trends included a decline in non-vegetarian food at modern trade during the lockdown due to supply constraint as well as lower purchase intent.

Income affected

Nearly 60 per cent consumers responded in an online survey conducted by Nielsen, stating that Covid-19 has negatively impacted their household income. While respondents said they have increased spends on regular expenses, they have reduced investments and focus is to maintain liquidity in terms of cash in hand or cash in banks.

Published on May 22, 2020

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