FMCG likely to grow 9-10 per cent in 2020: Nielsen

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.

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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.”

FMCG firms tap overseas business to boost growth

Source: LiveMint.com, Dec 05, 2019

Overseas business, led by better performance in markets such as Bangladesh and Indonesia, helped fast-moving consumer goods (FMCG) makers tide over weak demand in the domestic market, with Marico Ltd, Godrej Consumer Products Ltd (GCPL) and Emami Ltd posting 7-20% growth in their international business.

International markets contribute between 20% and 50% of sales for some domestic FMCG companies that have over the last decade bolstered their presence in West Asia, Africa, Latin America and south-east Asia, catering to increased demand for packaged consumer goods.

Companies such as Marico and GCPL have stepped up launches and product innovations in international markets, especially Bangladesh and parts of Asia, over the last one year. This, executives said, helped them hedge weak demand on their home turf.

GCPL, which draws over 46% of sales from international business, said it launched more products in key global markets in the last year than in India. “If you see the last year, the number of new launches in markets such as Indonesia, as well as in parts of Africa, have been higher compared to what they have been in India,” said Sameer Shah, head, finance (India and Saarc), at the Mumbai-based firm.

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Ecommerce to contribute 5% or $4 billion to FMCG sales by 2022 – Nielsen

Source: ETRetail.com, Dec 04, 2019

Mumbai: Nielsen expect ecommerce to contribute about 5% to overall fast moving goods market, and treble sales to reach $4 billion sales by 2022. At present, online account for 2% of FMCG sales at $1.2 billion and while the market researcher anticipates all channels to grow, general trade contribution could shrink by 400 basis points, almost entirely taken by online sales.

“This is in half the time that brick and mortar retail took to evolve. That said, these channels are not cannibalizing each other, and all continue to grow with e-comm outpacing modern trade and traditional trade,” said Sharang Pant, Head-Retail Measurement Services and Retailer Vertical, South Asia, Nielsen Global Connect said

Consumers are also buying more of higher-priced groceries online in metros now. For instance, one in four rupee spent on diapers is online while it controls 12% of skin cream spends. Within consumer basket, food accounts for 44% of online sales followed by personal care at 40%. Interestingly, the study shows that market leaders in toothpaste, utensil cleaners and packaged tea segments saw their share fall online during April-August compared to a year ago, indicating opportunity for challenger brands in the ecommerce space.

“In this rapidly evolving world of commerce, India’s FMCG industry is now making its presence felt in the e-comm channel – appealing to consumers’ need for convenience, and in sync with increasing smartphone and internet penetration,” said Prasun Basu, South Asia Zone President, Nielsen Global Connect.

While India emulates contributions from developed markets like Canada, Scandinavia and Western Europe where online account for just 1-3% to sales, markets such as China and South Korea have a significantly higher ecommerce contribution of 17% and 20% each.

FMCG companies tweak sales mix in slow market

Source: ETRetail.com, Nov 29, 2019

MUMBAI: To de-tangle growth from the grip of a slowdown, fast-moving consumer goods (FMCG) companies are redefining their product and marketing strategies, depending on their stage of evolution.

Hindustan Unilever (HUL), which is already well entrenched in both urban and rural India, has maintained its strategy of straddling the pyramid. Urban-centric company L’Oreal, on the other hand, is looking at a more premium play and has put the sachet strategy on the back-burner.

There are some like Nestle India that have a greater emphasis on urban market (75% of its sales) than rural, and are looking to strengthen its portfolio mix with a clear focus on the core.

In an exclusive interview with TOI, Nestle India CMD Suresh Narayanan said three factors will define the texture of consumption going forward. One is the mix of the portfolio which companies enjoy between super-premium, premium and mainstream products. “We will be expanding, but will be judiciously combining premiumisation with more mass-oriented products,” said Narayanan.

The second factor is the demand for a variety of products that consumers seek at different occasions.

“That’s what we played to with the aggressive innovation/renovation programme that we’ve had on 61 products in the last three years. That’s about three times what we were innovating before. The pace of innovation is going to play an important part,” said Narayanan.

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Consumption in rural India hits a 7-year low

Source: LiveMint.com, Oct 18, 2019

Rural household consumption slumped to a seven-year low in the September quarter, in a sign that the prolonged agrarian distress and near-stagnant rural incomes have eroded demand for consumer goods, market researcher Nielsen said.

Consumption of packaged consumer goods by rural households also grew at a slower pace than in urban areas for the first time in seven years, Nielsen said in a quarterly report on Thursday.

The rural economy has been plagued by falling crop prices and declining incomes, resulting in a severe slump in demand. Falling income has not only singed farmers but also landless wage workers, who together account for two-thirds of all rural households. Read the rest of this entry »

FMCG firms taking small, micro steps to beat rural sales slump

Source: LiveMint.com, Oct 06, 2019

New Delhi: It’s been months since Phool Bai, the wife of a daily wager from Nateran village in Madhya Pradesh’s Vidisha district, last purchased toothpaste. The shop from which she purchases her monthly household supplies has stopped selling goods to her family on credit over past dues, forcing her to cut down to the bare essentials.

In India’s rural hinterland, Phool Bai’s story isn’t unique. Thousands of vulnerable low-income households are falling back into extreme poverty. They are at the heart of a rural demand slump witnessed by packaged consumer goods makers. India’s villages account for more than 35% of overall FMCG sales. Read the rest of this entry »