FMCG sector grew 36.9% value growth in June quarter: Nielsen
Premium- The growth momentum in India’s FMCG industry that was building up in the preceding quarters did not see any major setback with the sudden onset of wave two, the researcher said
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India’s fast moving consumer goods market grew 37% (y-o-y) in the June quarter in value terms—albeit on a low base quarter, researcher Nielsen said in its quarterly update on the sector on Thursday.
However, growth dropped 2% sequentially as the second wave prompted state-wide lockdowns.
The growth momentum in India’s FMCG industry that was building up in the preceding quarters did not see any major setback with the sudden onset of wave two, the researcher said.
As a result, companies sold soaps, staples, toothpaste and ketchups as supply chains remained intact, stocks reached stores, and compared to the first round of lockdowns demand normalized as consumers went easy on pantry-loading.
Of the 36.9% growth (including e-commerce) reported by the sector in the June quarter—FMCG volumes grew 18.2%. To be sure, in the year ago quarter—value growth for the FMCG sector was down 17.9% largely dragged by lockdowns in April and May.
However, despite a more severe wave of infections supply chain disruption was limited. “If we go by just the average number of closure days for retail shops, wave two was less severe than the wave one of the pandemic. The lockdowns were decentralised and partial in nature, which allowed for greater accessibility for consumers. This led to consumers avoiding panic buying and it ensured lesser disruption in the supply chain" said Diptanshu Ray, NielsenIQ South Asia Lead.
India’s fast moving consumer goods sector has weathered a tough year—amid muted out of home consumption and intermittent lockdowns that impacted availability of goods. Demand patterns also shifted to favor more hygiene products, snacks and wellness products.
Nielsen did not share its full year estimates for the sector. It follows a calendar year.
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It also helps that demand rebounded faster in the aftermath of the second wave with several companies reporting an uptick in goods in June. “In fact, when indexed to pre-covid times (Q1’20) the industry largely continued to remain at similar levels," Nielsen said in its report.
Several large, packaged goods companies reported similar trends during the June quarter. Domestic volumes at Saffola edible oil maker Marico Ltd., grew 21% in the June quarter, albeit on a soft base of the year-earlier period when volumes dropped 14%. Dabur India reported a 32% growth in consolidated revenue from operations for the three months ended 30 June. The company reported a revival in discretionary spending with its home and personal care category reporting a 26% year-on-year growth.
Nielsen said rural markets grew 0.7% in the June quarter compared to the March quarter, while demand in urban markets dropped marginally quarter-on-quarter.
“Rural is largely stable and seeing some positive movement when compared to previous quarter of January-March 2021," the researcher said.
“Rural markets continued growth buoyancy with strong tailwinds on the back of good monsoon and affirmative actions from the government. The Metropolitan (top 52) cities also saw a significantly lesser impact in wave two, as compared to what was witnessed in the covid-19 wave last year," it said.
Traditional trade channels like grocers and chemists remained resilient, while sales via online retailers surged with e-commerce clocking a record high growth in the second quarter of the current fiscal.
“E-tailers focus on ensuring availability, and last mile delivery has yielded dividends," it said. As a result—E-commerce contribution to FMCG sales in the Metros (top 52 cities) reached a double-digit mark in the month of May 2021. Meanwhile, modern trade is still in the recovery phase when benchmarked to pre-covid period, Nielsen said in its report.
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