FMCG market to see muted growth in April-June quarter
Rural areas, Kantar said, has been the “bright star” for the sector, returning to the growth path after multiple quarters of weakness.
The Rs 5-trillion fast-moving consumer goods (FMCG) market will see muted growth during the April-June quarter, despite a rural resurgence, research firm Kantar said on Thursday.
In its outlook on the sector, the market researcher pointed to flat sequential growth in the March quarter, saying that a base effect that was visible in the year-ago period would wear out by the December 2024 quarter. It also anticipates a revival in FMCG growth by the December quarter, led by rural areas.
While the domestic FMCG market saw overall value growth of 5.4% in the March quarter, volume growth stood at 5.2% during the period, Kantar said. The December 2023quarter saw similar growth rates, it said.
The June and September 2024 quarters, on the other hand, may see a slight dip as the base effect will remain strong during this period.
For perspective, the FMCG market saw double-digit value growth in the region of 12.8% to 17.3% between the quarters ending December 2022 and September 2023, due to price hikes, inflationary pressures and buoyant demand in urban areas. Benign commodity costs and a persistent weakness in rural markets have since lowered value growth rates from the December 2023 quarter, Kantar said, but the market is ripe for a “turnaround” by the end of the current calendar year.
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Rural areas, Kantar said, has been the “bright star” for the sector, returning to the growth path after multiple quarters of weakness.
“The start to 2024 from a rural perspective has been brilliant, with rural growth overtaking urban in the March quarter. Rural may consolidate its position in the June quarter and will see better growth levels compared to urban in the remainder of the (calendar) year,” Kantar said.
In the March quarter, rural growth outpaced urban growth at 5.8%. Urban growth, in contrast, came in at 4.7%, lower than 5.6% seen in the previous quarter. Rural growth in the December 2023 quarter stood at 4.8%.
Kantar also noted that the Indian shopper is more optimistic now than before. 49% of them, it said, had responded in 2022, saying that things would become worse for them financially. That number has reduced to just 11% now, it said in its latest update.
Kantar says that while there are pockets of stress, notably in urban areas, the shopper is looking at the future with optimism.