FMCG industry will grow at 9-10% this year

Source: The Hindu Business Line, Jan 21, 2019

New Delhi: The FMCG industry, which has seen a challenging year especially due to sharp decline in rural consumption, is projected to grow at 9-10 per cent in 2020 in terms of value growth, according to market research and insights firm Nielsen.

The firm’s projection of “stable” outlook comes on the back of expectations of declining trend in inflation trajectory besides other macro-economic factors, including government’s measures to boost consumption.

After two years of double digit growth, the FMCG industry’s growth has slowed down to single digit in 2019. However, the sharp decline in growth seen in the past few quarters seems to have been arrested in the fourth quarter of the calendar year. According to the eight edition of the “India FMCG Growth Snapshot report” by Nielsen, the FMCG sector’s value growth stood at 9.2 per cent in 2019 as compared to 13.5 per cent in 2018, led by massive drop in rural consumption levels. With the inclusion of the e-commerce channel, the overall sector value growth has been pegged slightly higher at 9.7 per cent for 2019.

Value growth

Meanwhile, in the October-December period, FMCG value growth stood at 6.6 per cent (7.3 per cent with e-commerce), indicating that the sharp decline witnessed in the previous quarters has stabilised.

Value growth for FMCG industry in Q3 stood at 7.3 per cent (7.9 per cent with e-commerce).

Prasun Basu, South Asia Zone President, Nielsen Global Connect, said, “2019 has been a tough year for the FMCG industry with over four-point decline, but we do see it stabilising in the last quarter of the year. A mix of macro-economic factors, and channel and zone factors driven by manufacturers, coupled with consolidation of smaller players have been instrumental in the slowdown. However, 2020 offers a stable outlook for the industry arresting the 2019 decline.”

He added, “2019 was an election year and for a couple of months in the year the overall positive public thrust was in a bit of a standstill mode. We have seen in the past too, that in election years growth rates do come down.”

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