Source: Business Standard, Mar 26, 2021
Mumbai: The Rs 4.3-trillion fast-moving consumer goods (FMCG) market in India will revive this calendar year in line with the trend visible across Asia, market researcher NielsenIQ said on Thursday. The prediction was part of a broader outlook the agency released for the Asian region comprising China, India, Korea, Singapore, and Thailand.
India witnessed a nationwide lockdown a year ago, hurting FMCG growth. While the January-March 2020 period saw the market grow 3 per cent, it contracted in April-June, reporting a 19 per cent fall.
Since then, the market moved up, Nielsen said, growing 0.9 per cent in the September quarter and 7.1 per cent in the December quarter. In an update last month, Nielsen said the January-March 2021 period also looked strong.
“2020 was a challenging year with most Asian markets experiencing a decline or lower growth in FMCG. We believe the pace will pick up and normalise this year,” Justin Sargent, president, retail intelligence, NielsenIQ Asia, said.
But some firms differ with this view following a surge in Covid-19 infections in India.
“Certainly, packaged foods and consumer staples will do well in a situation where lockdown curbs will increase because of a second Covid wave,” said Mayank Shah, senior category head, Parle Products. “But discretionary segments will take a hit because the attention of consumers will be on essentials rather than non-essentials. So, FMCG growth is not likely to be even if viewed category-wise.”
This trend was visible last year during the nationwide lockdown when pantry loading increased significantly. At the same time, in-home consumption also rose, pushing up growth of packaged foods and staples. Personal care and out-of-home categories, on the other hand, were hit hard.
Sumit Malhotra, director, Bajaj Consumer Care, said discretionary spending would take a beating. “The focus will be on what is required urgently. So, discretionary spending of any kind will take a backseat.”
According to analysts tracking the domestic FMCG market, categories such as hair oils are beginning to see a weakness in demand as consumers turn their attention to essential items. On Thursday, India crossed 50,000 daily coronavirus cases after five months, setting alarm bells ringing. The widespread nature of the second wave has worried local governments, citizens, and businesses. States such as Maharashtra, Punjab, Madhya Pradesh, Rajasthan, and Kerala have imposed lockdown restrictions in towns apart from the big cities in recent weeks to curb the spread of the disease.
FMCG company executives have admitted they’ve been watching this trend closely, much like their counterparts in the consumer durables industry, since the April-June period is an important quarter for most consumer goods companies.
Nielsen, meanwhile, said there was room for opportunity and growth this year. “Growth can be found in the right stores, right categories, right segments, right occasions, and right price tiers. Dynamics are still uncertain but those who are more agile will be the big winners in 2021,” Sargent said. The market researcher has identified five key trends this year, including convenience, homebound, alternative, natural and blends that will shape the market. According to Nielsen, 62 per cent of Asians in a survey said convenient locations were a top reason to choose where they wished to shop. Around 76 per cent said services should offer more flexible options for lifestyles at home, while 69 per cent Asian consumers would switch to an eco-friendly brand with the same price and quality.