The FMCG sector, which saw a sharp decline in April-May in value growth, has begun witnessing green shoots in June, led by Eastern and Northern region, according to Nielsen.
While smaller towns and rural markets witnessed a strong bounce back in June after two months of negative growth during the lockdown, there has been a differential impact on consumption across the four zones of the country in the second quarter of the calendar year.
The Northern region, which recorded a decline of 28 per cent in terms of FMCG sales value growth in April-May compared with the same period last year, witnessed a growth of 8 per cent in June, according to the market research and insights firm. The Eastern region witnessed a decline of 31 per cent in terms of sales value growth in the April-May period compared with the same period last year but clocked a growth of 5 per cent in June.
Sharang Pant, Lead Vertical and RMS, Nielsen Global Connect, said incidence of Covid-19 cases per million and the levels of contribution of rural markets were the two factors that impacted growth trends of the FMCG sector across the four zones. “Higher rural population and lower incidence of Covid cases in East and North zone are also reflected in the FMCG industry growth trends. These two zones saw a shift from negative industry growth of April-May to a high single-digit growth in June,” he explained.
Meanwhile, the Southern region, which clocked a decline of 23 per cent in terms of sales value growth in April-May, recorded about 2 per cent growth in June, compared with the same period last year. At the same time, the Western region, which witnessed the sharpest dip of 33 per cent in terms of value growth in the April-May period, continued to be see a negative growth trajectory and sales value growth was down by 2 per cent even in June.
“The West zone that has a relatively higher urban population and had higher severity of the pandemic continued to decline in June,” Nielsen stated. The incidence of Covid cases per million was also the highest in the West zone. Pant pointed out that Southern and Western zones are more urbanised and the contribution of rural regions is relatively lower compared to East and North zones.
Overall, the FMCG industry witnessed a 17 per cent y-o-y decline in sales value in the April-June period. In the April-May period, the industry recorded a decline of 28 per cent. However, as the country gradually moved towards unlocking of economic activity in June, the industry clocked a value growth of 4.5 per cent.