The Fast Moving Consumer Goods (FMCG) market is likely to see further tapering down and decline in volumes, especially in the in-home consumption category due to a higher base effect.
The December quarter of 2020, was one of the fastest-growing quarters, with a 5.5 percent growth and these high baseline numbers are likely to cause another steep drop in growth rates in the next quarter as well (base effect). However, there are some silver linings as some categories are maintaining higher penetration than the pre-pandemic level, according to data analytics and market insight firm Kantar.
"By the end of 2021, the MAT (Moving Annual Total) growth will see further tapering down, and a decline in FMCG volumes, in-home is very much possible," the report further stated. (MAT is the total sales figures, over the course of the previous 12 months.)
"Despite this, we maintain that it is not a scary situation to be in, but rather a fact that mirrors the strong consumption trend the country has been witnessing for quite some time now," the report further added.
The September quarter retreated marginally by 0.5 percent against last year's same period, primarily led by urban India, which shrank by 2.6 percent.
"Rural is maintaining growth, but at just 1.5 percent," Kantar said, adding "as a result, the MAT September FMCG growth stood at 1.9 percent, slower than the population growth." The average quarterly growth in the pre-pandemic 2019 was 2.1 percent.
Specifically, categories like dish wash, spices, and salty snacks witnessed step-growth, without losing their penetration in any quarter since the onset of the pandemic, while categories like toilet cleaners and insecticides peaked when cases were high, lost penetration afterward, but are still maintaining higher penetration than the pre-pandemic period.