The country's fast-moving consumer goods industry witnessed a consumption slowdown in the December quarter, with overall negative volume growth, as consumers continue to reel under inflationary pressure.
According to the report released by data analytics firm NielsenIQ, in October-December, the FMCG industry grew 7.6 percent in terms of value but its volume growth was negative 0.3 percent.
"Overall FMCG volume growth is negative, the absolute values, as well as volumes, continue to be above pre-Covid levels across markets," it said.
The rural markets declined 2.8 percent registering the sixth consecutive quarter with negative volume growth, while the urban market maintained stable positive growth of 1.6 percent.
In the retail space, Modern Trade channels maintained a double-digit value growth of 23.3 percent and volume growth of 12.6 percent on a year-on-year basis. While FMCG sales from traditional trade channels such as Kirana stores witnessed continuous negative consumption growth (- 1.5 percent) for the fifth consecutive quarter.
"Consumers continue to feel inflationary pressure while manufacturers also continue to move away from promos to maintain the margins," said Sonika Gupta, Customer Success Lead (India), NielsenIQ.
Moreover, consumers continued to prefer purchasing smaller packets at both traditional and modern trade outlets, the report added.
Manufacturers should continue to support small packs in their portfolio as means to drive consumption, especially for bringing back relevance in the case of non-food categories.
"Re-evaluation of the portfolio strategy becomes even more important to address the intensifying competition from smaller players as they make a comeback," she added.
In continuation with the previous trends, sales of food items as staples and impulse continue to drive consumption growth, while non-food FMCG products are still being deprioritized by consumers. Non-Food consumption continues to decline across buckets and sees lower volumes than pre-Covid levels in the recent few quarters.
"This is also seen in lean assortments and a downward trend for stock levels in retail spaces - accompanied by manufacturers cutting down on promos for categories like washing powder, detergent bars, toilet soaps, shampoo, etc," it said.
Small manufacturers continue to drive consumption growth through Food baskets while in Non-Food, small players are impacted due to higher price growth, it added.
While detailing the consumption growth region-wise, the report said the Northern and Eastern region reported positive volume growth of 0.1 percent and 0.6 percent respectively.
"Although the West and South Zone continue showing negative consumption growth, there are marginal improvements against the same period last year," it concluded.