India’s FMCG sector shows signs of revival: Nielsen – Times of India

NEW DELHI: India’s fast moving consumer goods (FMCG) industry displayed signs of recovery in the third quarter of 2020 with a 1.6% growth (versus Q3 ’19), after an unprecedented decline of -19% in the January-March (Q1’20) quarter.
Although it slashed its 2020 growth outlook for the industry for the third time in the year to -3% from -1%, research and analytics company, Nielsen on Thursday said the recovery augured well for the sector that is being buffeted around by strong headwinds after having faced the full onslaught of the Covid-19 pandemic.
“The revival was aided by businesses opening up with the pandemic reaching stable levels. Markets started opening up in a phase-wise manner and store closures came down to an average of three days a month in Q3’20 from nine days a month in Q2’20,” Nielsen said in its latest report.
Rural and semi-urban markets continued to drive growth for the FMCG sector, which witnessed a double digit growth of 10.6% in Q3’20 in rural India, while the bigger cities, including metros, played catch-up.
“The rural markets have bounced back handsomely on the back of support provided by the government as well as good agriculture, reverse migration and a lower unemployment rate,” said a senior Nielsen analyst.
This was reflected in the multiple times increase in spends within food and non-food baskets in rural markets as compared to metros. In rural markets, sales of packaged staples, for instance, grew 11 times more than in urban and hygiene categories witnessed eight-fold more growth.
The rural growth story has also helped small manufacturers that have marched ahead in the third quarter, despite flat growth in FMCG. Apart from being more agile than their larger counterparts, small players had a higher presence in rural India and staples baskets helped with higher growths. Interestingly, the market also witnessed a higher entry of smaller players and a lower churn compared to earlier quarters.
Consumer wallets are shrinking too, Nielsen said, and this can be seen in the changes in their product preferences. While the premium category saw a revival post a drop in the second quarter, consumers continued to reach for affordable products, especially in the foods category.