Source: IBEF.org, Jan 23, 2019
According to market researcher Nielsen report, India’s fast-moving consumer goods (FMCG) market is expected to grow 9-10 per cent in the January-December period, matching the expansion rate in 2019. Since the rural slowdown has bottomed out, demand is expected to stabilise.
The growth witnessed a slow down to 9.7 per cent growth last year from 13.5 per cent in 2018. The growth was slowest in at least three years to 6.6 per cent in the December quarter from 15.7 per cent a year ago.
“A mix of macroeconomic factors and channel and zone factors driven by manufacturers, coupled with consolidation of smaller players, have been instrumental in the slowdown,” said Mr Prasun Basu, South Asia zone president, Nielsen Global Connect.
In 2019, the growth was slow for more than a dozen categories within daily household, personal and food products from 2018 with many segments witnessing growth rates reducing to half. This indicates that the consumer demand was weak despite price cuts to increase growth. The growth rates of the soaps, shampoos, biscuits, tea, hair oil, skin cream and toothpaste, among other categories, fall to low single digits in 2019 as compared with double digits in the previous year, industry executives said.
“The year 2019 was a difficult one when value and volume were both compromised,” said Mr Mayank Shah, category head at Parle Products.
Consumers were cautious to spend as the economy slowed, limiting themselves to spending on essential purchases only, he said. The rural demand which accounts for about a third of the market and had been outperforming urban sales, witnessed a slow-down. It was majorly affected because of lower farm incomes and liquidity constraints, squeezing the wholesale channel.
Nielsen report also stated that the stable consumption was on the back of the final tranche of Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) payments, improved ease of doing business ranking to 63 from 77, expectations of budget tax measures and a steady exchange rate.
“There has been a slowdown in consumer demand, more so in the second half of 2019. We expect a gradual recovery over the next three to six months,” said Mr Sameer Shah, head of finance at Godrej Consumer Products.