FMCG market in India expands 37% in April-June quarter: Nielsen

The fast moving consumer goods (FMCG) market in India grew 36.9 per cent year-on-year in the April-June quarter despite lockdowns in various parts of the country, market research firm Nielsen said.

Like in the same quarter last year, this year, too, business faced severe challenges like closure of retail and wholesale markets, but faster return to normalcy in June and manufacturers’ push for online distribution helped FMCG recovery this time around.

While the market registered higher growth over a low base, its growth rate on a moving annual total basis was 12.2 per cent backed by a 6.4 per cent growth in volume uptake. Most large manufacturers like HUL, ITC, Nestlé and Dabur avoided passing on the steep rise in input costs, but overall prices of packaged goods rose 5.8 per cent during the quarter, Nielsen noted.

After taking a hit during the April-June 2020 quarter, the Rs 4.5 trillion a year market has recovered over pre-pandemic levels. Data shows, while during last year’s lockdown it had shrunk by 21 per cent as compared to the January-March, 2020 quarter, this year it has grown by eight per cent over the level. Moreover, the overall market remained resilient against the lockdowns during the second Covid wave and sales in the June quarter dropped by only 2 per cent from the previous quarter.

According to Nielsen, the markets in rural regions “continued growth buoyancy with strong tailwinds on the back of good monsoon and affirmative action from the government”. But the markets in top 52 cities, or India’s metro market, remained subdued — growing by 1 per cent over the pre-Covid quarter. With operations at traditional retail channels such as grocery and mod­ern trade outlets restricted, manufacturers exploited the exempted channels like the chemist stores and e-commerce. Resultantly, FMCG sales through chemist channels grew at 21 per cent than the overall growth in the sector during the June quarter.

Data shows, the modern trade channel recovered to 83 per cent of the pre-Covid levels in June, in comparison to 78 per cent in the April-June, 2020 quarter. However, with the festive season and major retailers-led sales drives in the corner, Nielsen estimates the modern trade channel will recover in this quarter.