Research and insights firm Nielsen on Thursday, nearly halved the growth forecast for the FMCG sector to 5-6 per cent for the calendar year 2020 in India, due to macroeconomic headwinds, as the world grapples with the Covid-19 pandemic. It had earlier predicted growth to be in the range of 9-10 per cent for India's FMCG sector.
The firm has pointed to macro-economic conditions such as lower GDP growth rate predictions, rising unemployment levels especially in rural region as well as severe impact on economic activity across sectors and supply chains, due to the Covid-19 pandemic as key reasons for this forecast.
It also said that impact of lockdown is expected to be more visible in the April-June quarter for the FMCG industry, which had begun witnessing signs of revival in the first two months of the year.
According to Nielsen, while the all India FMCG value growth in the months of January and February, was at 7.5 per cent, the overall growth rate for the January-March period, was dragged down to 6.3 per cent (versus 13.8 per cent in Q1 2019).
Value growth excluding e-commerce for the FMCG sector in January-March quarter was even lower at 5.3 per cent. (versus 13.4 per cent in Q1 2019). Value growth for the FMCG sector stood at 7 per cent in October-December period last year.
As early signs of stress on economic activity due to the pandemic began playing out in March, FMCG sector's overall value growth sharply declined to 4 per cent and volume growth was just at 0.5 per cent in the month, according to Nielsen.