Fast Moving Consumer Goods (FMCG) Industry grew 9.4% during the period Jan – Mar 2021, Q4 of the Financial year 2020-21. In the immediate previous quarter, from Oct – Dec 2020, the industry grew 7.3% over the same period last year in 2019, according to a report released by Nielsen, a Research Agency.
The rural markets in India recorded a 14.6% growth over the same Q4 of the previous year according to Nielsen. However, the urban markets registered a 2.2% growth during this periodafter two consecutive quarters of declining growth over last year.
The Agency cautioned that the Q1 & Q2 of FY 21-22 would be quite challenging, especially with lockdowns across India during April & May and is expected to remain partially all through June with Covid-19 positive cases slowly declining across India.
As expected, the growth categories included staples, branded grocery, snack items such as biscuits, coffee, tea, and other indulgent categories such as Ketchup, Cookies, etc.
Our Views;
We believe the growth in rural markets is largely driven by the fact that there has been a huge influx of the working middle class to their native places, which are mostly located in Tier 2/3 towns of India, for ease of WFH as well as having an extended family time during the peak festival months between Oct ’20 – Mar ’21. The fact that many offices in metro cities are still closed is a clear indication that these markets are still not yet fully ready for consumption patterns to show positive trends.
With lockdowns in most large cities and the top 10 states (by consumption size) during April and May ’21, which is expected to spill over to June as well, the growth shall remain stunted for Q1 FY 21-22. The fact that e-commerce and hyperlocal delivery has come of age is not a solace as this market is extremely small at the moment, when the larger size of the Industry is concerned.
