FMCG Consumption Slips In July-Sep but Industry Logs Price-led Growth Of 13 pc

Small players were impacted the most while large players consolidated
FMCG Consumption Slips In July-Sep but Industry Logs Price-led Growth Of 13 pc

India's FMCG industry has seen a decline in volume in the September quarter this year, though it registered a value-led growth of 12.6 percent.

While the metro market saw an upswing, rural markets slowed down due to consumption decline, according to a report by data analytics firm Nielsen. Earlier, rural was ahead of urban in terms of growth, after quickly recovering from the first wave of the pandemic.

The slowdown is also because of the fact macro-economic factors such as high commodity prices continued to impact consumption growth during the quarter. 

The price-led growth is largely driven by the food basket, which contributes 59 percent to the FMCG industry. This was seen especially in staple foods like cooking mediums (edible oils), habit-forming foods like hot beverages such as tea, and impulse foods like salty snacks and confectionery. Volume growth is driven by packaged rice, breakfast cereals, butter margarine, and chocolates.

Moreover, small players were impacted the most while large players consolidated, the report said.

Of the total value growth of the FCMG industry in the September quarter, as compared to a year ago, 76 percent contribution came from large manufacturers, while small players had just 2 percent, the rest coming from mid-size players.

Moreover, brick-and-mortar was back in focus, as modern trade stores grew 17 percent in the quarter, registering double-digit growth as compared to the year-ago period.

The e-commerce channel growth remained steady during the quarter on account of the base effect, given the high growth of foods in e-commerce post the first wave of COVID-19 in the country.

According to the report, urban markets led by metros including Kolkata, Hyderabad, Mumbai and Pune led this growth.

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