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FMCG Consumption Continues To Decline In Rural Areas In Dec Quarter: NielsenIQ Report

Higher inflation levels during 2021 have led to three consecutive quarters with double-digit price increase resulting in consumption slowdown in urban markets, and consumption degrowth in Rural markets, it said

FMCG Consumption Continues To Decline In Rural Areas In Dec Quarter: NielsenIQ Report
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India’s fast-moving consumer goods (FMCG) industry grew 9.6 per cent in the October-December quarter over last year due to a double-digit increase in prices for three successive quarters,  according to industry data released by NielsenIQ.

In 2021, the FMCG industry had to go for double-digit price growth in three consecutive quarters to protect its margins, the industry saw a 17.5% growth in the Jan-Dec calendar year over the same period in 2020.

There has been price degrowth for the third consecutive quarter owing to price inflation, as per NielsenIQ's latest Retail Establishment Survey.

The sector saw volume degrowth of 2.6 per cent this quarter due to inflationary pressure, and other macro-economic factors, according to the survey.

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"Higher inflation levels during 2021 have led to three consecutive quarters with double-digit price increase resulting in consumption slowdown in urban markets, and consumption degrowth in Rural markets," it said.

Amid the price increase, the number of small manufacturers (with turnover below 100 crore) dropped by 13%. However, large and medium manufacturers stayed stable through the year.

The rural market continued to bear the brunt of price increases.

"The resulting consumption slowdown continues to be more accentuated in rural markets with –4.8% consumption degrowth, while urban markets are comparatively better at –-0.8%," it said.

Traditional trade in both urban and rural markets has seen a –4.8% volume degrowth that is leading the overall slowdown, it said.

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NielsenIQ South Asia Cluster Lead Diptanshu Ray said during the fourth quarter, the country's macroeconomic factors continued to witness softness, and there is a long-term impact because of global inflationary pressure.

"... Penetration of FMCG among online shoppers has increased from 15 per cent before the pandemic, to 25-30 per cent during the pandemic and it has stayed at 25 per cent after the pandemic," said the report.

The overall number of stores selling FMCG products in India grew at a CAGR of 4% over the period of 2019 to 2021, with the addition of 800,000 stores in the country, of these 60% opening in Rural India. 

The usual annual rate of growth has been approximately 1-2% in pre-Covid-19. The Metro-India retail store universe also grew with newer stores opening up in residential areas, to cater to consumers who were homebound for nearly two years, it said.

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