During the October-December 2020 period, the FMCG market rose 7.1 per cent, the second straight quarter of growth, driven by foods, health, hygiene and rural areas
The January-March quarter could herald a strong comeback for the country's Rs 4.3-trillion fast-moving consumer goods
(FMCG) industry in the calendar year 2021, market researcher Nielsen
IQ said on Tuesday. The outlook is based on the sector's performance over the last few months, especially the November-December period, during which the FMCG market grew by 9 per cent in each month — a steady climb from the lows it had touched following a nationwide lockdown and the Covid-19 pandemic in the first half of 2020.
“Based on the performance of the market in November-December, we anticipate strong positive growth in Q1 (Jan-March) and 2021 in general,” Diptanshu Ray, lead, retail intelligence, India, Nielsen
IQ, said. "However, we are keeping a close watch on a possible second wave of Covid-19 infections in some parts of the country and its impact thereof on business.”
The state of Maharashtra, Mumbai in particular, is seeing a surge in infections as normalcy returns. Delhi and other parts of India are yet to see an increase in infections, though experts have warned of a possible second wave of Covid-19 around March-April. For now, however, the FMCG industry, considered a barometer of consumer demand, is riding a wave, according to the Nielsen
During the October-December 2020 period, the FMCG market rose 7.1 per cent, the second straight quarter of growth, driven by foods, health, hygiene and rural areas, the research agency said. In July-September, the FMCG market had grown 0.9 per cent. These figures exclude e-commerce. If sales from this channel are added, then FMCG growth for July-September and October-December stands at 1.6 per cent and 7.3 per cent, respectively.
“Personal care, on the other hand, is reviving, driven by channels such as e-commerce,” Sameer Shukla, executive director, retail intelligence, India, Nielsen IQ, said. This point is endorsed by executives from companies
such as Dabur and Marico, who’ve seen their e-commerce sales surge as online saliency for personal care products increases. Growth in e-commerce is also happening as the revival in modern trade takes time.
Modern trade, for instance, contracted 2 per cent in the December quarter. And e-commerce is stabilising at a consumption level higher than what it is was before Covid-19 struck. This spurt, Ray said, was more prominent in metros. Traditional trade, meanwhile, continued its momentum, growing 8 per cent in the December quarter.
Shukla said India's metropolitan areas, or cities with a population of more than a million, had recovered, reporting growth of 0.8 per cent in the December quarter.
This follows two quarters of decline. Rural markets, on the other hand, continue to post double-digit growth, accelerating to 14.2 per cent in the December quarter from 10.6 per cent in the September quarter. Urban sales contribute 64 per cent to the FMCG market, while rural sales contribute 36 per cent.
The two quarters of growth in the second half of 2020 follows a sharp decline in the FMCG market in April-June, when the sector contracted 19 per cent. The January-March 2020 period was also marred by lockdowns, which came into effect from the middle of March. Sector growth for the quarter was just 3 per cent then.