FMCG Industry Sees 8.6% Volume Growth In Q3 As Inflation Eases: NielsenIQ

In the last 5-6 quarters, the industry went through high price-led growth, and volume remained under pressure as inflation touched record highs. However, an ease in commodity prices led to a reversal.

The data found that the consumption growth in the industry was dominated by both food and non-food sectors, with food baskets contributing to a higher end.

The FMCG industry in India witnessed a growth of 8.6 per cent in volume in the quarter ended September in the current year, data from analytics firm NielsenIQ revealed. The report revealed that this growth was led by the increase in consumption helped by the easing of inflationary pressures.

The data further stated that the industry reported a 9 per cent increase in value terms in the third quarter of the current calendar year, attributed to price corrections, reported PTI. In the last 5 to 6 quarters, the industry went through high price-led growth, and volume remained under pressure as inflation touched record highs. However, this trend reversed as commodity prices started easing up. 

The latest FMCG Quarterly snapshot released by the data analytics firm found that the rural market is displaying signs of recovery after it witnessed a slowdown in consumption for the last few quarters. At the same time, the urban market is maintaining a steady pace of growth. 

Smaller-sized packs are becoming popular in the rural markets, while average pack sizes are the favourite in the urban markets, even as there remains a preference towards larger packs, the data stated. 

Commenting on the data, NIQ  India Managing Director, Satish Pillai, said, “The FMCG industry has witnessed a further reduction in price growth from last quarter and has given a necessary impetus to the spending power of the consumer, this is evident in rural markets in particular where there is an uptick in consumption across categories.”

Pillai noted factors like easing of inflation helped by base effects, a recent fall in unemployment data, and LPG prices to be responsible for convincing consumers to spend in the market. 

Food And Non-Food Segments

Notably, the data found that the consumption growth in the industry was dominated by both food and non-food sectors, with food baskets contributing to a higher end. In July to September 2023, the food sector growth stood at 8.7 per cent, against 8.5 per cent in the preceding quarter in 2023. The non-food sector recorded a growth rate of 8.7 per cent in Q3 in 2023, against a growth rate of 5.4 per cent seen in the preceding quarter in the current year. 

In the food segment, growth was majorly driven by products under the impulse category like salty snacks, chocolates, confectionery items, and tea, coffee, etc. Amongst the non-food categories, the boost was credited to a rise in rural consumption growth, which registered an increase of 6.7 per cent in the quarter under review. 

The report also found that volume growth turned positive for the first time in the personal care segment in rural markets. In urban areas, the non-food sector logged an improvement in consumption growth, which grew at 10.4 per cent in Q3 2023, against 8.9 per cent growth in the second quarter of the current year. 

Modern Vs Traditional Trade

This growth was majorly driven by an increase in the quantity of goods sold across rural trade like Kirana stores and modern trade like hypermarkets, etc. The data also showed that in the retail sector, modern trade came out with strong double-digit growth in consumption at 19.5 per cent, while traditional trade, also improved, and logged an increase in consumption at 7.5 per cent in the quarter under review. 

Further, the industry saw small manufacturers report a better growth pace in the non-food segment in comparison to the larger players, while in the food segment, the latter outpaced the small players in volume growth.