India's FMCG Sector Grew 5.7% In July-September, Small Players Rebound: Nielsen IQ

The fast-moving consumer goods sector grew 5.7% by value between July and September, driven by demand in the country's hinterland, which grew twice as fast as cities, according to NielsenIQ.

Rural consumption growth rose to 6% compared to 5.2% in the April-June quarter. In urban areas, demand grew 2.8%, up from 2.1% in the previous quarter. This brought the overall volume growth for the FMCG sector to 4.1%, the data analytics firm said in its quarterly FMCG update on Thursday.

“The Indian FMCG industry shows resilience with steady value growth and marginal price increase [of 1.5%],” Roosevelt Dsouza, head of commercial, India, NielsenIQ, said in a statement. He said small manufacturers are rebounding after a recent decline, while major players trail in value growth.

Large companies with sales between Rs 1,000 crore and Rs 5,000 crore, accounting for 20% of the market share, experienced the highest growth in the quarter at 9.6%. Meanwhile, small players with sales of less than Rs 100 crore rebounded after three consecutive quarters of consumption decline, clocking a growth of 5.9% led by demand for staples including edible oil, packaged atta, and spices.

These smaller players outpaced the growth of giants, those exceeding Rs 5,000 crore in sales, who control 46% of the market. These companies grew the slowest amid slower value growth and declining volumes, compared to the previous quarter ended June, according to NielsenIQ. Among these giants, Hindustan Unilever Ltd. and Nestle India Ltd. have pointed out demand stress in cities. Inflation-hit middle-class families, according to them, are not spending enough, putting pressure on growth.

"In big cities, there is a trending down of growth, and I include all channels in all segments," HUL's Chief Executive Officer and Managing Director Rohit Jawa said post-earnings.

Category-wise, the volume growth of packaged foods rose 3.4% in July-September, despite price hikes, compared to 2.1% in the previous quarter. Over the counter categories, like rubefacient and analgesics, exhibited a growth in value sales to 11.7%, backed by price growth. In the home and personal care categories, the consumption growth stabilised at 6%, compared to 6.7% in the April-June quarter.