Chennai: Rural demand for packaged consumer goods outpaced urban markets for the first time in five quarters, while the FMCG industry witnessed 6.5 per cent growth in sales volume in the March quarter, according to NielsenIQ.
Rural markets, which have remained a significant concern for India’s fast-moving consumer goods (FMCG) companies for longer than a year, outpaced the urban market after 15 months. Rural demand was up by 7.6 per cent in the March quarter. On the other hand, urban markets reported a 5.7 per cent year-on-year rise in demand and the growth was slower than the December quarter’s 6.9 per cent increase. According to NielsenIQ, there was a “gradual uptick" in rural consumption that surpassed urban consumption in the March quarter.
In the March quarter, the FMCG industry reported a 6.6 per cent growth in value terms, driven by a 6.5 per cent increase in volumes. The volume growth for this quarter was higher than Q1 2023, which stood at 3.1 per cent. Both food and non-food sectors contributed to the growth in consumption in the first quarter of 2024, but non-food saw almost double the growth as compared to food.
Home and personal care (HPC) categories have outperformed food categories. While food categories witness higher unit purchases, the growth in HPC is largely driven by the popularity of larger pack sizes, NIQ Head of Customer Success India, Roosevelt Dsouza said.
Within the retail sector, modern trade continues to exhibit strong double-digit volume growth at 14.7 per cent. Traditional trade, on the other hand, experienced stable growth, with volumes registering 5.6 per cent growth in Q1 2024, compared to 5.3 per cent in the previous quarter.
While Godrej Consumer Products found that urban and rural markets grew at “similar levels" in the March quarter, Dabur saw its rural demand outpacing urban demand as the company expanded its footprint in the villages. Hindustan Unilever also is optimistic about rural consumption as it projects high single-digit growth in volumes.
