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Rural consumption surges 14.2%, life returns to metro markets: Nielsen

The FMCG snapshot for the months of October-December 2020 released by NielsenIQ's retail intelligence team says that India's metropolitans have sprung back into the positive growth zone in the December quarter, after two quarters of decline

twitter-logoAjita Shashidhar | February 16, 2021 | Updated 22:23 IST
Rural consumption surges 14.2%, life returns to metro markets: Nielsen
The overall FMCG industry in India saw a bounce back with a growth of 7.3 per cent in the quarter ended December 31, 2020

Rural India has indeed been more resilient than the metros and Tier-1 cities through the COVID-19 pandemic. The rural consumers bounced back much faster than their urban counterparts when it came to shopping for food, personal care products or consumer durables. However, the FMCG snapshot for the months of October-December 2020 released by NielsenIQ's retail intelligence team says that India's metropolitans (more than a million population cities) have sprung back into the positive growth zone (0.8 per cent vs year ago) in the December quarter, after two quarters of decline.

The rural growth story continued, with rural markets showing the robust 14.2 per cent growth in October-December quarter, vis-a-vis a 10.6 per cent growth in the July-August-September quarter. This sharper recovery, as per the report, is on the back of favourable agricultural sector performance, government initiatives towards rural employment generation, and lesser impact of the pandemic on rural India.

The overall FMCG industry in India, as per the Nielsen report, saw a bounce back with a growth of 7.3 per cent in the quarter ended December 31, 2020. "While the Indian consumer has had a tough year, the last quarter of 2020 has seen a recovery in consumption as economic activities have started moving back to normalcy (opening up). The festive season brought a further boost to the sentiments and since then there has been a visible uptick in growth for the industry resulting in increase in consumption across staples, and home and personal care," says, Diptanshu Ray, Lead, Retail Intelligence, India, NielsenIQ.

The hygiene and immunity building categories continued on a high value growth (46 per cent vs year ago), which was driven by consumption growth (34 per cent vs year ago) in the quarter. The home and personal care basket made a consumption led recovery (5 per cent volume growth vs year ago), while food categories saw a 10 per cent growth riding on boost in consumption as well as price increase in some food baskets. This growth recovery was widespread in the food basket, including staple foods that grew 18 per cent in the December quarter.

Through the lockdown, one got to see a lot of smaller brands as well as regional brands assume prominence. By virtue of being closer to market they were able to reach consumers faster than the bigger brands. They were far more agile and nimble too and this led to their growth. Small FMCG manufacturers, with an annual sales turnover of less than Rs 100 crore, as per the Nielsen report, have continued to exhibit double digit growth (16 per cent over year ago) in the December quarter. Rise in consumption volume and price-led growth have an equal proportion to this growth trajectory among the group of small manufacturers. This group was buoyed due to its higher dependence on rural India and staple foods, both which have performed better.

However, large manufacturers with annual sales of more than Rs 600 crore have also jumped back to the growth zone after two quarters of decline, says the Nielsen report. The performance was pronounced by a 5 per cent value growth led by 4 per cent rise in consumption volume, says the report.

Also Read: How Frontier Markets all-woman salesforce enables last mile delivery in rural India

Also Read: Q3FY21 earnings: Growth momentum continues with impressive show so far

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