FMCG Grows 9.4% in Q1 on Higher Value, Consumption Revival

The Indian Fast Moving Consumer Goods (FMCG) industry has recorded a 9.4 per cent growth in the January-March quarter of 2021, helped by a consumption-led growth and value growth by increased prices of products, especially of staples, said data analytics firm Nielsen. The rural market continued to perform with strong growth of 14.6 per cent during the period and the metro markets have registered a positive growth after two quarters.

FMCG industry sales growth from the traditional trade channels jumped to double digits, while growth in e-commerce normalised down to single digits in the January-March quarter. "FMCG industry in India has built growth momentum by growing at 9.4 per cent in the quarter ending March 2021 after growing at 7.3 per cent in the previous quarter (October-December 2020), over the same quarter of the previous year," said FMCG Snapshot for Q1 2021 released by NielsenIQ’s Retail Intelligence team. 

Commenting on it, NielsenIQ South Asia Lead Diptanshu Ray said: "This is backed up by staples, essential non-foods, and indulgence categories.” However, he also cautions that the beginning of the second quarter may bring some new dimensions, as the situation is dynamic across the country. "Now that lockdowns have resurfaced, and with last-mile delivery boost up, the e-commerce channel will continue to be dynamic,” it said.

According to the report, the metro cities have registered a positive growth of 2.2 per cent in the January-March quarter after two-quarters of the declining trend versus the year-ago period. "Rural markets continue to further build on the growth momentum - growing at 14.6 per cent in the March quarter after a 14.2 per cent growth it posted in the Dec quarter,” it said.

Moreover, Nielsen expects a good expected monsoon this season, making it the third consecutive year of rural rejoice. This had a boost-up effect on the earnings of agrarian households and kept rural sentiments upbeat. Besides, rural-centric schemes as bigger outlay for MGNREGA, rise in wages, and increase in MSP of key crops have been instrumental in keeping FMCG consumption in rural markets buoyant.

"We also saw the Large and medium-sized companies bouncing back in Rural India,” it added. While talking about the consumption growth during the January-March quarter, Nielsen said it was uniform for both foods and non-foods. Foods basket got a boost from the pricing uptick - mainly in staples categories like Edible Oils and Packaged Tea. Consumption growth witnessed for certain categories in non-staple Foods categories as well such as Biscuits, Coffee, Cheese, Ketchup because of increased in-home consumption.

"There are green shoots of personal care categories' growth coming back while Snacking and Impulse Foods basket maintained growth trajectory," it said. On the other hand, the Non-Foods categories basket saw a dip in average pricing. "This is due to the increased contribution of larger packs in the consumer basket and rise in consumer promotions in Essential Home Care and Personal Care categories," it said.