FMCG volumes dip in This fall as costs chunk

NEW DELHI : Pricier soaps, shampoos and snacks pressured shoppers to trim purchases and change to smaller packs within the March quarter, squeezing volumes at fast-moving shopper items corporations. Researcher NielsenIQ stated packaged shopper items gross sales quantity fell 4.1% from a 12 months earlier within the quarter, however the business reported a worth progress of 6%, thanks solely to aggressive worth hikes.

Rural markets noticed a 5.3% decline in gross sales quantity, the steepest within the final three quarters, whereas city volumes dipped by 3.2%. Rural markets reported a worth progress of 6.6%, whereas city markets clocked 5.6%, the researcher stated.

Pricing pressure

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Pricing strain

“A decline in consumption is echoed throughout zones and the city lessons, however is extra distinguished in rural markets, which noticed a 5.3% dip, the best consumption slowdown previously three quarters. The south and north zones noticed greater than 5% quantity decline,” NielsenIQ’s quarterly report stated.

A number of massive shopper items corporations have reported a consumption slowdown within the March quarter as inflation damage family budgets. This was additionally evident in increased demand for small or so-called worth packs and corporations reporting softer quantity progress.

Corporations have additionally made aggressive worth hikes to counter price pressures. NielsenIQ identified that rural markets witnessed sharper worth hikes than city markets; costs rose 11.9% from a 12 months in the past in rural areas towards 8.8% in city markets. Larger worth hikes might have been taken on packs bought in rural India within the type of decreasing grammage, resulting in a steeper consumption decline within the countryside. “In continuation from final 12 months, macro-economic indicators are nonetheless guiding consumption patterns for the Indian shopper, and they’re feeling the influence of the value enhance, particularly within the meals and necessities classes,” stated Satish Pillai, managing director, India, NielsenIQ.

In keeping with Pillai, at the same time as international macro-factors such because the battle in Ukraine drive up commodity costs, any constructive steps by the federal government, if supported by a standard monsoon, could be encouraging for the business.

Though the decline in gross sales quantity was unfold throughout classes, it was extra pronounced in non-food classes as shoppers centered on important gadgets. For example, packaged meals, which contribute 61% to FMCG gross sales by worth, declined 1.8% from a 12 months in the past. In distinction, volumes in non-food classes had been down 9.6% in the identical interval.

“Inside meals, impulse beats the slowdown with constructive quantity progress of 1.5%, with shoppers specializing in smaller packs within the class seen in salty snacks, sweets and confectionery. The staples product basket with classes reminiscent of refined and non-refined edible oil, vanaspati, packaged atta has proven a virtually 15% worth enhance,” it stated.

In the meantime, gross sales via trendy commerce have stabilized in current quarters, NielsenIQ stated. Within the March quarter, FMCG volumes grew 5.3% via this channel. Conventional commerce reported a 4.9% decline in volumes, led by a shift in the direction of smaller packs. E-commerce grew 5.6% in comparison with a 12 months earlier.

Sonika Gupta, buyer success lead (India), NielsenIQ, stated shoppers scaled again extra on discretionary spending inside non-food classes. “Total, there’s an evident shift by shoppers to smaller pack sizes to handle exterior components for each meals and non-foods,” Gupta stated.

Corporations too reported related traits within the March quarter.

Vatika oil maker Dabur India reported a setback in rural demand. “For us, previously couple of quarters, our rural was at all times firing forward of city. Nevertheless, what we discovered on this quarter is a liquidity crunch and demand compression in rural India. Due to this fact, our credit score (cycle) has additionally gone up in rural India. Rural is the one which isn’t doing so nicely for us in the intervening time,” the corporate’s chief government Mohit Malhotra stated throughout the quarterly earnings name final month.

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