Rural demand for the FMCG sector witnessed a slowdown in the September quarter. According to research firm Kantar, which tracks household consumption, rural market growth by volume was estimated at 1.5 per cent in the July-September period. In comparison, rural growth was pegged at 4.5 per cent by volume in the September quarter in 2020.
The research firm stated this dip in growth was on expected lines due to the higher base in the year-ago period. It also pointed to a slowdown in the growth of the food category in rural markets.
Kantar said that the personal care products category and household care products segment maintained healthy growth despite seeing a slowdown.
Growth of the personal care category in rural India by volumes was pegged at 6.2 per cent in the September quarter down from 7.1 per cent in the June quarter. Similarly, the growth of household care category stood at 4.3 per cent in terms of volumes, compared to 4.9 per cent in the June quarter. However, the foods category saw a de-growth of 0.2 per cent in the September quarter.
Negative territory
The market research firm believes there is high probability of rural growth slowing down further and even entering the negative territory in the December quarter. It said this will be due to the high base effect because the December quarter in 2020 had witnessed one of the strongest rural growth at 6.6 per cent by volume and slowdown in growth of the foods category. It added that crop damage due to heavy rains in various parts of the country is also expected to adversely impact rural consumption.
In a statement, K Ramakrishnan, Managing Director, South Asia at Kantar Worldpanel, said: “We have called out rural as the growth engine that will lead the country through the pandemic, and we see that unfolding. Even though there is a slowing down of growth, it is an expected slowdown. Rural’s Q4 2020 was so big that even if it is roughly able to hold on to those volumes, it would be a huge achievement.”
“The reasonably good growth numbers in sectors other than foods suggest that the consumption fundamentals are still strong and the slowdown is largely due to a unique 2020, which we expect would get rectified soon,” he added.