FMCG value growth back in double digits

MUMBAI: A price-led boost has propelled the FMCG industry to grow again in double digits at 10. 9% in terms of value in quarter ending June 2022 as against 6% in the preceding January-March period. Volume growth, however, continued to be in the negative territory at -0. 7% in the June-ended quarter even though it improved sequentially from -4% in January-March.

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Urban markets revived with positive volume growth (0. 6%), compared to slower recovery in rural markets (-2. 4%) for the quarter under review. Modern trade continued to see volume growth (7. 8% in April-June over 5. 5% in preceding quarter), while traditional trade is showing signs of recovery (to -1. 5% in April-June from -4. 9% in March quarter).
Satish Pillai, MD India at NielsenIQ, said, “Overall, this quarter saw a consumption revival across categories in FMCG, primarily led by a jump in unit growth. Urban markets have turned towards a positive consumption growth, and rural markets are following closely. ” This, Pillai said, beats the previous two quarters of consumption decline and highlights the onset of cautious optimism among consumers. “Also, the consumption recovery and promising macro factors support NielsenIQ’s forecast of double-digit growth for 2022,” he added.
While the volume decline is driven by a reduction in average pack size growth (‘shrink- flation’), unit growth has bounced back to 8. 9% in the April-June quarter from 1. 5% in preceding one, which indicates that consumers are buying smaller packs. However, they are buying more units.
NielsenIQ customer success lead (India) Sonika Gupta said, “Within both foods and non-foods, there is a drop in average pack size growth and consumers continue to prefer smaller packs, which is evident by the high unit growth. Grammage reduction is also a catalyst for this behaviour to a great extent. Manufacturers and retailers must keep an eye on changing consumer preferences and manage their portfolio accordingly by ensuring availability of small packs in maximum stores. ”
The foods segment has seen a positive volume growth of 1. 8% in April-June. Within this, impulse categories like chocolates and salty snacks have grown 15. 1%. Non-foods continued to be negative, but there was a marginal uptick (-6. 4% in June-ended quarter versus -9. 6% in March-ended quarter). Within this, non-essential personal care categories such as perfumed deodorants & cologne saw over 40% volume growth, buoyed by the summer season and consumers heading out for work and entertainment as they got back to normal routines.