FMCG volumes dip 2.6% in December quarter: NielsenIQ
Premium- ‘During the fourth quarter, the country’s macro-economic factors continued to witness softness, and there is a long-term impact because of global inflationary pressure’
New Delhi: After five quarters of growth, volumes of fast-moving consumer goods fell 2.6% year-on-year in the December quarter with demand for packaged goods dipping sharply in India’s villages, according to industry data released by NielsenIQ.
Higher inflation levels during 2021 have led to three consecutive quarters with double-digit price increases resulting in consumption slowdown in urban markets and consumption de-growth in rural markets, the market researcher said in its Q4 2021 FMCG Snapshot on Wednesday.
NielsenIQ reported a more “accentuated" slowdown in rural markets with volumes down 4.8% during the quarter. This slowdown comes after rural markets led demand for FMCG companies a few months into the onset of the pandemic. Inflation is hurting rural households, it said.
"Categories like staples or OTC have seen high price increase in last two quarters, leading to larger price growth in rural markets and, hence impacting the volumes," the researcher said in its report.
Diptanshu Ray, South Asia Cluster Lead, NielsenIQ, said consumers in rural India are going back to small pack sizes to counter price increases.
However, the industry reported a 9.6% growth in value terms on account of successive price hikes taken by large fast moving consumer goods companies. For the full year, the FMCG industry reported a smart 17.5% growth, albeit led by price increases. NielsenIQ follows a calendar year.
The December quarter saw a 9.6% year-on-year value growth for FMCG in India primarily based on the double digit increase in prices for three successive quarters.
“During the fourth quarter, the country’s macro-economic factors continued to witness softness, and there is a long-term impact because of global inflationary pressure. Within this environment, the calendar year has seen a double-digit growth, though there has to be a watch out for continued consumption degrowth impacted by price increases", said Ray.
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Ray said consistent inflation across edible oils and staples is hurting household budgets. As a result, consumers are spending less on non-food categories such as home and personal care.
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