FMCG largely immune to second wave; 36.9% value-added growth in Apr-Jun

The fast-moving consumer goods (FMCG) sector remained largely immune to the devastating effect of the second COVID-19 wave. It saw a value-added growth of 36.9 per cent in the April-June quarter as against a year ago. The industry remained resilient with a minimal drop of 2 per cent as against the January-March quarter. Moreover, retailers are refilling their shelves with leaner stocks, which means that brands are required to increase service frequency.

Despite the impact of the second wave, the FMCG sector did not see any major setback. The sector, in fact, continued to largely remain at similar levels as the pre-COVID times, states a NielsenIQ report.

Diptanshu Ray, NielsenIQ South Asia Lead said the second wave was less severe than the first wave in terms of closure days for retail shops. “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,” he added.

RURAL VS METRO

Both rural and metro markets saw significantly lesser impacts. Rural markets continued to grow on the back of a good monsoon and affirmative actions from the governments. The metros or top 52 cities, meanwhile, saw e-commerce helping them tide through the troublesome times.

Sameer Shukla, Customer Success Lead, NielsenIQ South Asia said that e-commerce contribution to FMCG sales in the metros reached a double-digit mark in May.

Traditional trade channels like grocers and chemists remained buoyant in the quarter.

MOST DYNAMIC

Chemists continued to be the most dynamic channel within traditional trade. Chemists emerged as the most dynamic with 11 per cent higher growth delta over the FMCG industry growth, stated the NielsenIQ report. This growth has been attributed to the addition of diverse categories from food to home care baskets on their retail shelves.

Modern trade, meanwhile, is still in the recovery phase when compared to pre-COVID period. However, the report says that the festive season might bring good tidings. Had it not been for the second wave and delay in pick up from certain baskets like non-food space, modern trade would have moved along upward.

ASSORTMENT PRIORITISATION

A trend that emerged in the January-March quarter was the prioritisation of assortment of brands and stock-keeping units. That trend intensified in the April-June quarter. The report says that there are two trends that were observed: expansion of the number of categories per outlet and number of variants and associated quantities in stock.

“This signifies that retail shelf space is getting more competitive; thus the call for action for manufacturers is to identify the right variants, by markets, and finding optimum frequency for servicing retail outlets,” stated the report.

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