The FMCG sector witnessed positive consumption trends at the pan-India level recording a volume growth of 8.6 per cent in the September quarter while value growth was pegged at 9 per cent, according to the latest estimates released by NIQ India.This volume growth was backed by gradual recovery in rural consumption and continued robust urban consumption trends. This pick-up in consumption was also supported by the fact that rural consumers are beginning to spend on non-food categories beyond essentials.

Volume growth in the September quarter for the overall FMCG sector was up 8 per cent compared to the same period last year, it added. NIQ(NielsenIQ) attributed this growth to robust expansion of FMCG sector leading increased consumption across the country. .

Rural

Stating that rural markets are witnessing signs of recovery, the research and insights firm pegged rural volume growth at 6.4 per cent in the September quarter over the year ago period. Volume growth in the rural region was estimated at 4 per cent in the June quarter. Although rural continued to lag urban growth rates

Urban

Meanwhile, urban markets maintained a stable rate of growth recording volume growth of 10. 2 per cent in September over year-ago period. Urban volume growth in June quarter was also at 10.2 per cent.

“The FMCG industry has witnessed a further reduction in price growth from last quarter and has given a necessary impetus to spending power of the consumer, this is evident in the rural markets in particular where there is an uptick in consumption across categories. Overall, cooling of inflation in the country fueled by base effects; a recent decline in unemployment figures, and LPG prices amongst other factors have contributed to the willingness of the consumer to spend,” said Satish Pillai, Managing Director, NIQ India in a statement.

The report noted that “smaller-sized packs” are having higher offtake in rural areas while in urban markets offtake of “average pack sizes” has turned positive besides continued preference for larger packs.

Food and non-food categories

Foods and non-food categories witnessed similar pace of growth at a pan-India level. In Q3 2023, food sector volume growth was at 8.7 per cent compared to the same period last year ( up from 8.5 per cent in Q2 2023.)  The Non-Food sector also recorded growth at a rate of 8.7 per cent in Q3 2023 versus same period last year and a significant increase from the 5.4 per cent seen in Q2 2023. This improvement was supported by increase in rural consumption growth in non-food categories especially in the personal care segment.

“Unlike other APAC markets, where subdued growths are driven by price hikes, the India story is all about higher consumption. Continuing the gradual trend observed in recent months, rural consumption is witnessing a positive trajectory”, said Roosevelt D’souza, Lead, Customer Success, NIQ India.

“Impulse food categories continue to exhibit strong growth, and we see a growth recovery in habit-forming categories such as biscuits, tea, noodles, coffee, etc. after five quarters. An increase in consumer spend on discretionary categories like personal care and home care products suggests that rural consumers are beginning to spend beyond essential categories. This change in spending could be attributed to easing inflationary pressures. This renewed optimism across the country augurs well for the festive season,” D’Souza added.

Modern trade and traditional trade

Consumption is being propelled by an increase in the number of units sold across Rural, Traditional Trade (TT), and Modern Trade (MT). Overall the modern trade channel saw strong double-digit volume growth (19.5 per cent) in the September quarter. Meanwhile, traditional trade volume growth improved to 7.5 per cent.

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