(PTI) The country's FMCG industry continued to witness consumption slowdown in the September quarter, with rural markets registering a higher decline in volumes compared to the three months ended June, says a report.
Also, consumers continued to prefer purchasing smaller packets amid companies hiking prices in response to broader inflationary pressures, according to the report released by data analytics firm NielsenIQ on Thursday.
The FMCG industry witnessed an overall volume decline of 0.9 per cent in the September quarter in comparison to the preceding three months.
This was the fourth consecutive quarter with negative volume growth for the industry and is "attributed to the double-digit price growth for the past six consecutive quarters," the quarterly FMCG industry report said.
Rural markets recorded a volume decline of 3.6 per cent in the September quarter in comparison to a decline of 2.4 per cent in the June quarter.
"The consumption decline in the rural markets continues to be led by both double-digit price increases and lower unit growth," the report said.
During the same period, urban markets recorded an 1.2 per cent increase in volumes.
This growth was led by the food segment with a 3.2 per cent volume growth while the non-food segment had a decline of 3.6 per cent in the September quarter.
However, the report said the Indian FMCG industry continued to have a price-led growth in topline, with a an 8.9 per cent growth in the July-September period compared to the previous quarter.
"Volume and value sales of FMCG are above pre-Covid levels" of March quarter of 2020 as the "markets have opened up completely post-pandemic," it added.
Consumers continued to prefer smaller pack sizes. For the industry "average pack size growth is negative in July-September 2022, as consumers keep on buying smaller packs," the report said.
"Most of these new product offering is in terms of changes in pack size. This could be the result of manufacturers working with smaller grammages as raw material prices are still high," the report said.
During the September quarter, volume degrowth at traditional trade channels such as kirana and neighbourhood shops deepened by 2 per cent compared to the June quarter.
Modern trade channels such as hypermarkets, supermarkets and malls "remain resilient with double-digit value (22.2 per cent) as well as volume (11 per cent)," the report said.
As per the report, small manufacturers and top 400 FMCG players are driving the consumption with positive volume growth of 0.5 per cent.
"They are also gaining both value and volume share in last 2-3 quarters when looked at sequentially," it added.
NielsenIQ Managing Director India Satish Pillai said that while the pressure of inflation continues, there have been variations in rainfall across rural areas in the country that have also led to a softening of indicators for rural markets.
This sentiment also shows up in the cautious behaviour of the retail trade, he added.