FMCG Growth Slows to 4% in Q2 2024 as Food Sector Stumbles

New Delhi, Aug 8 (KNN) India's fast-moving consumer goods (FMCG) sector recorded a modest 4 per cent year-on-year value growth in the April-June 2024 quarter, as reported by consumer research firm NielsenIQ.

The growth, while positive, reflects a deceleration compared to the previous quarter, largely due to subdued performance in the food sector, which has been a significant drag on overall FMCG consumption.

The food sector, which accounts for a substantial portion of FMCG consumption, saw growth taper off to 2.4 per cent in the April-June quarter. This marks a steep decline from the 4.8 per cent growth observed in the January-March period.

According to NielsenIQ, this slowdown is primarily driven by staple categories like packaged salt, wheat flour (atta), and palm oil, which have seen a significant drop in demand.

The moderation in these essentials has heavily impacted overall FMCG volume growth, which stood at 3.8 per cent for the quarter.

Interestingly, price growth stabilised at a mere 0.2 per cent during the quarter, indicating a stable pricing environment that has allowed for better consumption, particularly in rural areas. Rural India posted a 5.2 per cent increase in volume growth, outpacing urban growth, which lagged at 2.8 per cent.

Despite this relative strength, both rural and urban markets experienced softer consumption compared to the previous quarter, where rural and urban volumes grew by 7.6 per cent and 5.7 per cent, respectively.

Roosevelt Dsouza, Head of Customer Success – India at NielsenIQ, remarked, "The Indian FMCG industry’s steady growth reflects its resilience and adaptability, despite the macroeconomic headwinds. However, the deceleration in volumes signals caution as both rural and urban areas grapple with softer consumption patterns."

The non-food segment exhibited a more robust performance, with a 7.6 per cent volume growth in the April-June quarter, though this too marked a decline from the 11.1 per cent growth in the previous quarter. Personal care and home care categories, which are significant components of the non-food sector, also saw reduced momentum.

In urban markets, personal care volumes grew by 5.2 per cent, a sharp decline from the 9.7 per cent seen in the January-March period. Rural areas showed a similar trend, with personal care growth at 8.3 per cent, down from 10.6 per cent.

High-contributing homeware categories like laundry and utensil cleaners experienced sluggish demand, particularly in rural regions.

Despite the overall slowdown, summer-specific categories such as soft drinks, packaged drinking water, prickly heat powder, and glucose powder provided some relief.

Soft drinks, in particular, grew at a rate twice as fast as the broader FMCG sector, although there was some moderation in sequential growth.

The report also highlighted the growing disparity between large FMCG players and their smaller counterparts. Large companies continue to demonstrate stronger performance, benefiting from stable pricing and economies of scale.

In contrast, small and mid-sized players are struggling to maintain price stability, which has adversely impacted their volumes.

(KNN Bureau)