Nov 30,
India’s fast-moving consumer goods (FMCG) industry has shown good signs of recovery in the third quarter of 2020 with a 1.6% growth (versus Q3 ’19), after an unparalleled drop of -19% in the April-June (Q2’20) quarter.
Even though it reduced its 2020 growth outlook for the industry for the third time in the year to -3% from -1%, Nielsen- research and analytics company, reported that the recovery predicted well for the sector that is being knocked down due to the Covid-19 pandemic.
Nielsen said in its latest report that the stable level was achieved as the market started opened up in a phase-wise manner and the businesses unlocked up amid pandemic. Actually the manner and store closures came down to an average of three days a month in Q3’20 from nine days a month in Q2’20”.
Rural and semi-urban markets continued to drive growth for the FMCG sector, which saw double-digit growth of 10.6% in Q3’20 in rural India, while the bigger cities, including metros, playing catch-up.
The rural markets have rebounded nicely on the back of support provided by the government as well as good agriculture, reverse migration and a lower unemployment rate. This was reflected in the multiple times increase in spends within the food and non-food baskets in rural markets as compared to India’s metros.
In rural markets, sales of packaged staples, for instance, grew 11 times more than in urban and hygiene categories witnessed eight-fold more growth. The rural growth story has also helped small manufacturers that have marched ahead in the third quarter, despite flat growth in FMCG. Apart from being more agile than their larger counterparts, small players had a higher presence in rural India and staples baskets helped with higher growths.
Remarkably, the market likewise witnessed a higher entry of smaller players and a lower churn compared to earlier quarters. Consumer wallets are shrinking too, Nielsen said, and this can be seen in the changes in their product preferences. While the premium category saw a revival post a drop in the second quarter, consumers continued to reach for affordable products, especially in the foods category.