June FMCG sales back to pre-Covid-19 levels, thanks to rural India: Nielsen

The Indian industry has a delayed recovery in comparison to other countries, but the FMCG sector has touched pre-Covid-19 level sales in June primarily helped by a rebound in rural consumption and sales from traditional channels, said data analytics firm Nielsen on Friday.

According to Nielsen, both urban and rural sales are growing but the recovery/sales from the undeveloped semi-urban/rural quarters are much faster and traditional trade channels as neighbourhood and Kirana stores have scored over modern trade outlets as retail outlets and hypermarkets.

Compared with other global markets such as China, Malaysia, Indonesia and Thailand, the industry in India has witnessed a delayed growth recovery due to extended lockdowns, said Nielsen President - South Asia Prasun Basu.

Though it has taken three months, we are kind of coming back to the levels, which we had left behind at the end of last year and the beginning of this year Q1 period. If that was 100 in the index, then today we are at 98, which is almost recovered. Good news is that it is a clear recovery but a slowish recovery, said Basu.

The FMCG industry had a sharp decline in April .It started recovering in May (25 per cent decline) and in June, it returned almost to pre-Covid-19 level, said the Nielsen report.

Nielsen is comparing the average sales data of December, January and February and from June. It has dropped March for the baseline comparison as according to Basu, it was the month when there was panic buying in the segment with lots of pantry uploading.

According to Nielsen Global Connect West Market Leader - South Asia Sameer Shukla, the growth recovery is led by rural and traditional channels.

Rural is the major contributor toward that recovery. It's not that urban has not recovered as it had a higher dip in April and May and then gain. In rural, the dip was not that significant, he said.

Over baselines of 100 of December, January and February sales, rural has now recovered to 109, while the urban trade is 92, while the traditional trade has come to 101 as against 78 of the modern trade, which includes big format retailers.
 

Rural sales contribute to around 37 per cent of the total FMCG sales, Shukla added.

Interestingly, some segments as beauty have witnessed a sharp recovery in June.

With the majority of people confined to their house, cosmetics and beauty categories were de-prioritised in the lockdown phase - categories like Deodorants, Hair Colour and Skin Care had witnessed a significant slowdown. These categories witnessed a sharp bounce back in June, said Nielsen.

Hygiene segments including products as toilet soaps, liquid toilet soaps and floor cleaners continue to be in the priority list of the shopper under the new normals post-Covid-19.

These categories continue to command a higher share of wallet in the unlock phase and are firmly entrenched in the new normal' shopping basket, it said.

Besides, Nielsen has reported surge in immunity boosting products as chyawanprash and branded honey amid the Covid-19 crisis.

Nielsen, which had conducted a study during June 19 to 25, involving 1,725 respondents in 22 cities, found that safety and immunity will remain embedded in consumer behaviour for a long time and a very high proportion of consumers are planning to continue these measures for more than six months.

This behaviour is corroborated by high and accelerated sales growth of evolved hygiene categories like liquid toilet soaps, and immunity-boosting categories like chyawanprash & branded honey, it said.

Moreover, the consumer is preferring home delivery over in-person visits to the neighbourhood or departmental stores, and are consciously minimising interactions through contactless' options.

Two in every three respondents in the Nielsen study revealed apprehension of the vast majority for any form of long-distance travel in the next six months, it said.