FMCG industry growth goes down to 11-12% in 2019 from 13.8% in 2018; Nielsen reports

Jan 30, 2019

Market research firm Nielsen India has reported that that the FMCG growth for calendar year 2019 is at 11-12 percent compared to 13.8 percent growth clocked in 2018. Nielsen had projected FMCG industry growth for 2018 at 13 percent.

The report said for 2019, the first half of the year (Jan-Jun) will have decent double digit growth, while the industry in the second half (Jul-Dec) will taper down to high single digits, and  similar trends will be witnessed across the key super group of product categories such as food, personal care and home care.

Food contributes 55 percent to the FMCG sector, followed by personal care (25 percent), Home care (14 percent) and over the counter products (6 percent).Sameer Shukla, Executive Director, RMS-South Asia at Nielsen India pointed out that historically, for India’s FMCG industry, growth rates in election years have been a tad lower than other years.

According to Nielsen, some of the key drivers for the FMCG industry during the current year 2019 are conducive to macro-economic environment, the base effect, the rural growth consumption story, sustained benefits from GST regime and election impact.

Indian FMCG industry registered a healthy double-digit growth (13.8 percent) in the calendar. The FMCG industry saw a healthy consumption led growth where contribution of volume led growth shot up to 77 percent in 2018, a 13 percentage point jump over that in 2017.

The healthy consumption growth in 2018 was driven by favourable macros such as GDP growth and Inflation and manufacturers passing on the benefits of margin expansion coming out of GST regime.

In 2018, FMCG sector registered 13.8 percent growth largely driven by volumes. Interestingly, 10.7 percent out of the 13.8 percent overall growth in 2018 was volume or consumption driven growth while the remaining was price-led growth. Last year’s volume growth was highest in last 10 years.

Nielsen pointed out that the price-led growth is likely to be slightly higher in 2019 as against 2018, depending on the industry dynamics and macro factors.

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