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India's fast moving consumer goods (FMCG) industry is likely to grow at a slower pace at 11-12 percent in 2019, almost 2 percent lower than that in 2018, says a report.
The industry is also expected to grow at 12-13 percent during the April to June quarter of the calender year 2019, according to Nielsen.
"In line with the FMCG growth forecast for Q1 2019 at 13-14 percent, this sector grew at 13.6 percent. We are witnessing a softening of growth by 1-2 percent sequentially every quarter leading to healthy double digit growth in the first half of the year followed by a high single digit growth in the second half of the year," Nielsen said.
Nielsen maintained that the FMCG industry growth outlook will be in the range of 11-12 percent in 2019, almost 2 percent lower than that in 2018.
The volume growth which peaked in 2018 to 11 percent is expected to be healthy but lower at 8.5- 9.5 percent in FY19, it added.
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It noted that the 13.6 percent growth in first quarter is slightly lower than the last quarter of 2018 (-2.3 percent from the previous quarter).
"Similar sentiments are witnessed in the economy with a 6.6 percent GDP growth in the December quarter of 2018 against an expected 6.8 percent. Inflationary pressure is also seen mounting in recent months from 2 percent in January 2019 to 2.9 percent in March 2019," it added.
"While slight drop is witnessed in urban growth, there is a significant softening of growth trends in rural which is dampening the overall FMCG industry growth from third quarter of 2018 to first quarter of 2019.
Historically, rural has grown 3-5 percent points faster than urban and the recent slowdown in rural growth has brought the growth closer to the urban growth.
"The overall drop witnessed in rural growth is majorly driven by slow down in packaged food category," it noted.
