According to a recent report by Nielsen IQ (NIQ), rural India has experienced positive growth in consumption during the January-March 2023 quarter, after a gap of six straight quarters.
The report stated that the rural market, which contributes around 35% of FMCG sales, has shown an increase in sales volumes alongside a decline in price growth, PTI reported.
For the first time in six quarters, the rural market showed a positive consumption growth of 0.3%, while the urban markets-maintained momentum with a growth rate of 5.3%, said NIQ.
The market previously saw consumption growth in April-June 2021 and had declined in subsequent quarters until the October–December period of 2022. Overall, the FMCG industry witnessed a volume growth of 3.1% and a value growth of 10.1% in the March quarter. it noted.
"This value growth is driven by a revival in consumption in rural markets and traditional trade, which were under duress for more than a year," the report stated.
Moreover, during the March quarter, price growth for FMCG has also dropped to 6.9% with stabilisation in retail inflation. It was at 7.9% in the December quarter. Continuing the previous trends, food products continue to drive consumption growth with a 4.3 growth, helped by an uptick in the staples, it said.
Overall non-food consumption has turned positive (0.2%) after six quarters, driven by home care categories. However, personal care is still in decline.
"Consumers continue to rationalise spending overall within Non-Food in-home care and personal care," it said.
Besides, traditional trade, which includes neighbourhood and Kirana stores, witnessed a consumption growth revival of 1.9%, while Modern Trade (MT) formats such as hypermarts, shopping malls, etc. retained a double-digit growth of 14.6%, it added.
"The improvement in consumption growth is led by a higher number of units being consumed, however, shifts towards larger packs is awaited. Urban, Rural, and TT see an upward movement in terms of average pack size growth but remain negative," said NIQ.
Over its forecast for the Indian FMCG sector, NIQ said despite global uncertainties, it stands 'tall' with a growth of 7-9% for the full year 2023.
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