FMCG cos eyeing 20% growth in 2023, bet on rural demand to drive segment

Source: Financial Express, 07 March 2023

The FMCG industry is optimistic about at least 20 per cent growth in 2023 after an ‘exponential growth’ in 2022. “We saw a high demand and a growth of more than 30 per cent from the last fiscal year. We have already crossed Rs 4500 crores turnover, which was projected till the end of March 2023,” said Ashish Khandelwal, Managing Director, BL Agro.

With the ongoing wedding season leading up to Holi, FMCG companies traditionally witness a strong Q4 in terms of consumption. “The Q4 and Q1 of next FY will be good as the market is under control. Unlike last year it went up due to the Russia-Ukraine war, this year it is stable,” said Angshu Mallick, MD & CEO, Adani Wilmar Ltd. The staples categories like besan, dal, atta and rice have shown huge improvement and brands which are good in quality are surely going to grow and can expect better results, he added.

BL Agro is expecting to witness an increase of 100 per cent in sales and has also set up a new manufacturing unit to double its production and fulfill the demand, he added. “2023 will see an upward graph for the FMCG market. FMCG is one of the segments where the demand can never go down, the growth percentages may definitely vary,” said Ashish Khandelwal.

“FMCG industry grew by 7-8 per cent in 2022 in terms of sales and is likely to grow at the same pace in 2023 if the growth trajectory remains the same. I expect the Food & Beverages sector may grow around 10-12 per cent whereas the Home and personal care segments are likely to grow 8-9 per cent in 2023,’ said Azaz Motiwala, Founder at IKON Marketing Consultants.

Further, the FMCG companies reiterated that there had been a transition from unorganised to organised segment in 2022 which will continue in 2023 and the FMCG sector is poised to outgrow traditional growth rates. “Additionally, digitalization is likely to be a significant driving force in the growth and development of the FMCG sector in 2023,” said Manish Bandlish, Managing Director, Mother Dairy Fruit & Vegetable Pvt Ltd.

For NextG Apex India Pvt Ltd which sells brands like Mamafeast and Naturefest, the sales revenue for its service model is expected to grow by 30 per cent CAGR as compared to last year, and for its own labels, sales is expected to grow by more than two times in 2023. “ It is expected that around six to seven crores of revenue will be attained during this period,” said Amarnath Halember, Executive Director and CEO, NextG Apex India Pvt Ltd.

Rural or Urban driving the growth?

While the demand for the FMCG companies are coming from both – urban and rural markets, the segment, after a demand slump since the last few quarters, is witnessing green shoots of recovery in the rural markets. In the third quarter ended December 31, 2022, the companies reported growth in the urban markets. Rural markets, which contribute around 35 per cent of FMCG industry sales, are showcasing signs of improvement on the back of encouraging winter crop sowing, indications of higher farm income and continued government stimulus.

“It has been evident that the increase in sales is maximised more in rural areas or tier-II & tier-III towns as compared to the metropolitan cities. The growth in metros will be stagnant in 2023,and the major growth is anticipated to come from tier-II & -III towns,” said Amarnath Halember.

PepsiCo India too is witnessing strong demand from rural India for its foods and beverage products. “This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones,” said Ahmed ElSheikh, President, PepsiCo India.

On the price front, FMCG players believe that the present prices will remain stable and there will be no price change right now. “I think the present prices are stable. It has come down from the top and the consumers are accepting it. We see good demand at these prices. So, I don’t think prices are likely to go down because it is more technical in nature. We feel that these are comfortable prices,” added Angshu Mallick. In terms of products, packaged goods, ready-to-eat segments, and health and wellness products are expected to bring in most sales.

Govt to bring retail trade policy to promote ease of doing business for traders

Source: Financial Express, 06 March 2023

The government is working to bring a national retail trade policy for brick and mortar retail traders with an aim to promote ease of doing business, a senior official said on Monday.Joint Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Sanjiv said that the policy would also help in providing better infrastructure and more credit to traders.

The Department, he said, is also working to bring an e-commerce policy for online retailers.”We want that there should be synergy between e-commerce as well as retail traders,” Sanjiv said at a conference on FMCG and e-commerce here.

The Department is also in the process of formulating an insurance scheme for all the retail traders. The accident insurance scheme would particularly help small traders of the country, he added.

”The government is trying to do policy changes not only in e-commerce but national retail trade policy which will be for physical traders which will be introducing ease of doing business, providing better infrastructural facilities, providing more credit and providing all sorts of benefits to traders,” he said.The Joint Secretary urged the industry to focus on producing high quality products.

Strong demand in rural India for both foods and beverage products: PepsiCo India President INTERVIEW

Source: Financial Express, 07 March 2023

PepsiCo India is witnessing strong demand from rural India for both its foods and beverages products. “This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones,” Ahmed ElSheikh, President, PepsiCo India, told The FMCG brand is also looking forward to a strong summer season this year. George Kovoor, Senior Vice President – Beverages, PepsiCo India, said, “We’re excited about what an early onset of summer could signify for the beverage sector in 2023. We are optimistic that our portfolio of well-known brands, such as Pepsi, 7UP, Mirinda, Slice, Sting, and Mountain Dew, will be able to meet consumer demand for refreshing, high-quality beverages to help them beat the heat.”

In its results for the fourth quarter and full-year 2022 ending December 31, 2022, PepsiCo said that its India unit delivered a ‘double-digit organic revenue growth’ in 2022 and has gained market share in the segment in markets, including India. With the inflationary pressures expected to persist in 2023, PepsiCo expects the business to “build on the momentum and strength delivered in 2022”.

In-home consumption remained strong while out-of-home and on-the-go consumption steadily rose in the post covid era. Our product portfolio in foods and beverages are in high demand and the digital consumer category continues to expand with brands building value propositions in a socially networked world thereby significantly driving growth for PepsiCo India. PepsiCo India’s core focus continued to cater to the evolving consumer needs and provide them positive choices by introducing new flavors and launching new products like Pepsi Black, Quaker Oats Muesli and Lays Gourmet among others.

Which regions will bring more sales (urban or rural; metros or tier-II & beyond towns; etc.)?

We continue to witness strong demand from rural India for some time now, for both our foods and beverage products. This is largely due to labour migration, increased digital penetration and enhanced distribution of our portfolio and rural India switching from unbranded loose products to branded ones.

What is your business outlook for the year 2023?

In 2022, we witnessed a seismic shift in omnichannel channel growth with sales significantly outpacing in-store growth across metro cities. As we move forward, the strategy will be to focus on product and consumer experience innovation, prioritizing profitable channels, diligently managing SKUs, and driving execution & productivity across the system. This decade is a decade of India and we are focused on building capabilities, availability and expanding penetration while driving category innovation. With consumers making conscious choices, they are looking for brands that are contributing to the environment at large along with providing affordable products.

What are your thoughts on the Union Budget 2023 for the FMCG segment?

The Union Budget 2023 maintains the country’s robust growth engine with healthy growth predicted on all key metrics. It’s a positive and favorable budget, with the Government’s emphasis on infrastructure, technology, and entrepreneurship boosting economic growth. On the other hand, farmer-centric programs, last-mile connectivity, and digitization will further contribute to the FMCG sector’s multiplier effect.

Worst of inflation over and there is gradual recovery for FMCG, says Marico MD & CEO

Source: Financial Express, 20 February 2023

Saffola, the master brand under which Marico offers healthier food options, is now worth Rs 2,000 crore-plus, said Marico MD & CEO Saugata Gupta. About inflation, Gupta told PTI the “worst” is behind and he sees a gradual recovery for the FMCG (Fast Moving Consumer Goods) segment with rural market making a comeback.

The rural FMCG market, which has  witnessed a decline in the last 4-5 quarters, is expected to have a turnaround in the next 2-3 quarters, he said. “I think the worst  is behind,” said Gupta, adding, “Overall for FMCG, we see a gradual recovery, but that has to be led by rural. Urban has been decent.” At the industry level, food continues to do well and HPC (home and personal care) category is struggling a bit. This is because, last year, there was significant inflation, he said.

As inflation eases,  now he expects “better margins” in top-line and said the urban market and modern trade channels are recovering and going back to pre-Covid levels while the general trade is doing well in food. Marico, which is expanding the addressable market in the food segment, said it has been a “significant success” and is on track to meet the aspiration of having Rs 850-crore-plus revenue in FY24 from the present level.

Marico plans to add more products into the food segment under its master brand Saffola, expanding its addressable market. In the last two years, Marico has introduced several new products under Saffola, ranging from honey to peanut butter, soya chunks to instant noodles, making it as a healthy lifestyle advocating premium food brand from being just an edible oil brand.

“Saffola master brand, if we put together, it is a Rs 2,000-crore-plus brand,” said Gupta. Between food, digital and some of its premium portfolios like skincare, male grooming etc, which are non-core parts of the portfolio, in the next two years will constitute to mid-teens to Marico’s overall turnover, he said.

“Food has been one of the significant diversification journeys we have taken in Marico. Our effort was to expand the total addressable market, with the brand Saffola, participating in the healthier food segment,” Gupta added. In the latest December quarter Marico’s food business grew 31 per cent in value terms. However, hair oils posted a value decline of 3 per cent. Its sales from channels such as general trade declined in mid-single digits and rural is still behind urban. While sales from modern trade channels and e-commerce grew in high double digits.

Marico, which owns brands such as Parachute, Saffola, Hair & Care, Nihar, Nihar Naturals, Livon etc., get around one-third of its domestic sales from the rural markets. “Our rural contribution is lower because of our food and Saffola business. Out rural contribution is in the mid-30s,” he said, About the outlook, Gupta said: “You will see a growth improvement as we move forward in the next couple of quarters in the India business and as far as international business is concerned, there are some inflation and currency headwinds. We continue to be resilient and we are confident of double-digit constant currency growth.”

FMCG industry hopes to recover lost volume, margins in 2023; to shrug off shrinkflation

Source: Financial Express, 27 December 2022

Shrinkflation or reducing the size or quantity of a product while keeping the price unchanged was a little-known term in India but a surge in raw material costs following the war in Ukraine pushed several FMCG companies to resort to such a practice to ensure there is no impact on the fragile recovery in demand. And when they exhausted all options, FMCG (Fast Moving Consumer Goods) companies raised prices. Now, they are hoping to recover the lost ground in 2023, with a recovery in margins and volumes, especially from the distressed rural areas amid softening commodity prices.

FMCG companies are “cautiously optimistic” and expect the rural market, which accounts for more than one-third of the overall sales, to bounce back in 2023 riding on a good harvest season, government impetus, and improvement in farm income. Besides, they expect the tailwinds of emerging channels like modern trade and e-commerce driving urban demand, and from a rise in premium discretionary categories.

Besides, the FMCG industry, which witnessed a seismic shift in omnichannel growth with sales significantly outpacing in-store growth across metro cities, expects the trend to continue and the strategy will be to focus on product and consumer experience innovation, prioritising profitable channels. Just when demand seemed to be recovering, a war in Ukraine sent commodity prices shooting up early this year. To tackle high raw material costs, several FMCG companies downsized product packets while keeping the price unchanged. Dubbed ‘shrinkflation’, this effectively means consumers are paying the same for less of the product.

But with Covid infections receding and the economy opening up, the demand started to recover in the last quarter of 2022. And FMCG companies, who were severely hit during the previous two years because of the pandemic, are hoping things will improve in 2023.”We are cautiously optimistic about the year 2023 and hope to see a revival in rural demand in 2023. The urban demand growth will continue to be driven by emerging channels like modern trade and e-commerce,” Dabur India CEO Mohit Malhotra told PTI.

The industry has seen a double-digit price hike in 2022. A recent report by data analytics firm NielsenIQ said the FMCG industry witnessed an overall volume decline of 0.9 per cent in the September quarter compared to the preceding three months. Emami Vice Chairman Mohan Goenka said high inflation and rural slowdown continue to be the areas of concern but commodity prices have started easing.

“Though from October onwards, we are witnessing easing of commodity prices, however, its benefits can only be realised by the next financial year. We expect a rural bounce back by 2023 riding on a good season, government impetus and improvement in farm incomes,” he said.

Britannia Industries Executive Vice-Chairman & Managing Director Varun Berry said post-pandemic demand has stabilised quite well. However, on the cost and profitability front, commodity inflation remained on the boil on the back of rising inflation in flour and milk products, he added.

“In general, commodity prices are not softening right now. However, we do hope that they should come under control going forward. The only commodity which is softening right now is palm oil while wheat prices are on the rise and sugar has been stable. Hopefully, as we move forward, things should come under control soon,” he said.

In 2022, the FMCG industry had the higher contribution of new launches across key categories as companies introduced new pack sizes amid inflationary pressures. PepsiCo India President Ahmed ElSheikh said, “as we move forward, the strategy will be to focus on product and consumer experience innovation, prioritising profitable channels, diligently managing SKUs, and driving execution and productivity across the system.” This decade is a decade of India and PepsiCo is focused on building capabilities, availability and expanding penetration while driving category innovation, he said.

According to Tata Consumer Products Ltd MD and CEO Sunil D’Souza, two key trends that gathered pace during the pandemic were increased focus on health and wellness, and digital adoption and those will continue in the FMCG sector.”We think these trends are here for the long term and this will continue to influence our innovation agenda as well as our marketing and sales and distribution,” he said.

However, D’Souza also said that inflation, costs and macroeconomic volatility are areas of concern. So, it will be important to balance margins while remaining focused on driving growth momentum, he noted.

In a report earlier this month, Crisil Ratings projected FMCG companies’ revenues to grow between 7 to 9 per cent next fiscal.Marico MD & CEO Saugata Gupta said, “we expect to see a gradual improvement in the margin pressure and cost pressure and are hopeful of a recovery in rural sentiment. As of now, the urban consumption and premium segment is much better placed especially because the premium discretionary FMCG segment had a far lower base last year, especially in categories that were related to outdoor consumption.” Marico aims to deliver “at least mid-single digit volume growth in H2” and “expects digital portfolio to keep growing every quarter till it reaches Rs 450-500 crore mark in FY24,” he said.

Nestle India will continue to strengthen its RURBAN strategy and there will be a key focus supported by distribution expansion and portfolio tweaking.”In addition, technology and data will also form the core of Nestlé India’s future growth story,” a Nestle India spokesperson said.Besides, the FMCG companies would also invest in the expansion of production capacity and expand sales network in the rural markets.

“In FY 2023-24, we are adding another greenfield factory in Bihar at an investment of about Rs 275 crore. We are also looking at higher investments to support our innovations, which will be critical for the next phase of growth,” Britannia’s Berry said.

CavinKare forays into men’s grooming segment; to offer head-to-toe solutions

Source: Economic Times, 21 September 2021

Fast Moving Consumer Goods major CavinKare on Tuesday forayed into the men’s grooming category by launching “BIKER’s” brand and unveiled a slew of products under its initiative, a top company official said. “This foray into the men’s grooming category, which is expected to cross $1.2 billion by 2024, marks a significant step in the CavinKare 2.0 growth strategy. The pandemic has opened many opportunities for all industries, but it has been a game changer for the beauty and hygiene category”, CavinKare Director (FMCG) and CEO, Venkatesh Vijayaraghavan said.

He said the company has witnessed an increased interest among the ‘urban’ male consumers for personal grooming products. “Hence we have used our strength, Research and Development, to develop an entire product line specifically curated to match the needs of urban male consumers”, he said in a press release.

Under the BIKER’S brand, the company launched 2-in-1 shampoo conditioners, beard oil, beard cream and shower gel to satiate the needs of the urban male.

“With an avid interest from men towards personal grooming products, the brand will offer head-to-toe solutions for all the damages caused due to long commute and stress”, it said.

Enriched with the goodness of ingredients like Moringa leaves, Aloe Vera and more, the products offer holistic care and nourishment as well, the company said.

Announcing the launch on Tuesday, the company unveiled its first range of products in the shampoo category, which will hit the markets in Tamil Nadu from today.

The BIKER’s Shampoo would be available in three variants — Helmet damage repair, anti-dandruff and strong and bouncy shampoos which would be priced between Rs 80 and Rs 415.

The bottle has been designed like a motorcycle handlebar to resonate the target consumer and product would be available across retail outlets, kirana stores and select e-commerce portals.

Under its 2.0 growth strategy, CavinKare has drawn up aggressive expansion plans, besides planning to garner group revenues of Rs 5,000 crore in 3-5 years.

Amway plans to invest Rs 170 crore over the next two to three years in India

Source: Economic Times June 13, 2021

Direct selling FMCG firm Amway India plans to invest Rs 170 crore in the next 2-3 years in the country to boost research and development (R&D), manufacturing automation and innovation. The company also plans to strengthen its nutrition portfolio, which accounts for over 60 per cent of its revenue, by exploring adjacent and expanded spaces around the nutrition segment.

“Amway has earmarked an investment of Rs 170 crore for the next 2-3 years in India.

“This amount will be used to boost R&D, manufacturing automation, innovation and science, and home delivery as well as to strengthen our digital capabilities to ensure efficient functioning,” Amway India CEO Anshu Budhraja told .

Budhraja said that moving forward in 2021, Amway’s growth will be fuelled by key levers that include increasing awareness around nutrition and immunity, accelerated digital adoption and a robust supply chain with seamless last-mile delivery.

“The year 2021 will witness a strong pipeline of innovative product launches including an advanced version of the foundation range of supplements, newer formats of products that are more engaging and appealing to youth and much more.

“We will further strengthen the segment with a huge focus on the herbal category, while also developing affordable herbal nutrition supplementation,” he added.

Amway India’s nutrition portfolio registered a double-digit growth contributing over 61 per cent to the company’s business revenue in 2020. Out of the total 140 products in India, Amway has about 42 products in the nutrition portfolio.

“With continued demand for nutrition and immunity supplements, we are expanding our nutrition portfolio catering to the evolving consumer demands.

“We are looking at multiple innovative solutions such as strengthening the existing portfolio, developing new products in the traditional herb’s category, looking at options in affordable supplementation space and new formats,” Budhraja said.

The company is also exploring adjacent and expanded spaces around the nutrition segment.

Recently, Amway India launched Nutrilite Vitamin C Cherry Plus tablets, intended for people with weakened immunity.

Earlier this year, Amway India also made a foray into a new category with the launch of Chyawanprash by Nutrilite to strengthen the immunity supporting portfolio.

Budhraja said that this year, Amway India will also focus on developing affordable traditional herbs nutrition solutions and expanding the kid’s nutrition portfolio.

“We are working towards strategic partnerships with leading brands aiming to offer the best of products and solutions to its discerning consumers like the strategic partnership the company entered with ITC in 2020,” he added.

In 2020, ITC and Amway India entered into a strategic partnership to jointly distribute a range of products in the health and immunity-boosting space.

FMCG industry record 9.4% growth in Jan-March, rural continue to perform and metro cities recover

Source: Retail Economic Times, May 12, 2021

New Delhi, The Indian FMCG industry has recorded a 9.4 per cent growth in the January-March quarter of 2021, helped by a consumption-led growth and value growth by increased prices of products, especially of staples, said data analytics firm Nielsen. The rural market continued to perform with strong growth of 14.6 per cent during the period and the metro markets have registered a positive growth after two quarters.

Fast Moving Consumer Goods (FMCG) industry sales growth from the traditional trade channels jumped to double digits, while growth in e-commerce normalised down to single digits in the January-March quarter.

“FMCG industry in India has built growth momentum by growing at 9.4 per cent in the quarter ending March 2021 after growing at 7.3 per cent in the previous quarter (October-December 2020), over the same quarter of the previous year,” said FMCG Snapshot for Q1 2021 released by NielsenIQ’s Retail Intelligence team.

Commenting on it, NielsenIQ South Asia Lead Diptanshu Ray said: “This is backed up by staples, essential non-foods and indulgence categories.”

However, he also cautions that the beginning of the second quarter may bring some new dimensions, as the situation is dynamic across the country.

“Now that lockdowns have resurfaced, and with last-mile delivery boost up, the e-commerce channel will continue to be dynamic,” it said.

According to the report, the metro cities have registered a positive growth of 2.2 per cent in the January-March quarter after two-quarters of the declining trend versus the year-ago period.

“Rural markets continue to further build on the growth momentum – growing at 14.6 per cent in the Mar quarter after a 14.2 per cent growth it posted in the Dec quarter,” it said.

Moreover, Nielsen expects a good expected monsoon this season, making it the third consecutive year of rural rejoice.

This had a boost up effect on the earnings of agrarian households and kept rural sentiments upbeat.

Besides, rural centric schemes as bigger outlay for MGNREGA, rise in wages and increase in MSP of key crops have been instrumental in keeping FMCG consumption in rural markets buoyant.

“We also saw the Large and medium-sized companies bouncing back in Rural India,” it added.

While talking about the consumption growth during the January-March quarter, Nielsen said it was uniform for both foods and non-foods

Foods basket got a boost from the pricing uptick – mainly in staples categories like Edible Oils and Packaged Tea.

Consumption growth witnessed for certain categories in non-staple Foods categories as well such as Biscuits, CoffeeCheese, Ketchup because of increased in-home consumption.

“There are green shoots of personal care categories’ growth coming back while Snacking and Impulse Foods basket maintained growth trajectory,” it said.

On the other hand, the Non-Foods categories basket saw a dip in average pricing.

“This is due to the increased contribution of larger packs in the consumer basket and rise in consumer promotions in Essential Home Care and Personal Care categories,” it said. 

Asked about big foreign firms which have made investments in India in the past year, the commerce and industry minister said Apple and Samsung have invested on a large scale in the country and expanded their facilities.

Referring to the two firms, he said: “I believe they are looking at India as their prime production base to meet the needs of the world.”

He added that pharma companies are also looking at expanding their investments in India.

The minister also expressed confidence that going forward, India will be able to overtake China in its engagement with Bangladesh.

His statement comes at a time when Prime Minister Narendra Modi is visiting Bangladesh.

The Prime Minister left for Bangladesh on Friday on a two-day visit during which he will take part in a wide range of programmes aimed at furthering cooperation between the two countries.

Goyal further said it will be a “record year” in terms of FDI inflows for India, despite the pandemic and “the fact that all international statistics suggest that foreign investments across the world are going to significantly fall in the current months.”

Observing that India was amongst the “rare countries” which saw FDI growth in 2020, the minister said he has “absolutely no doubt it will be a record FDI”.

Asked about India’s relations with Bangladesh vis-a-vis Bangladesh-China ties, he said India has been working relentlessly to build strong relations with all its neighbouring countries.

Goyal said India’s ability to add more value to the products and services has helped it expand trade ties with countries like Bangladesh.

“I have the confidence that going forward, we will be in a position to overtake China in their engagement with Bangladesh. We are working with that single-minded purpose and our industry has the ability,” said the minister.

He said India’s services sector has the confidence, adding that “we in government are also proposing several initiatives, some of which should be discussed during PM Modi’s visit to Bangladesh.”

However, he added that India does not hold a grudge against any country for its engagement with anybody else and focuses only on what it can do with that country better.

Goyal, who is also the railways and consumer affairs minister, said the Indian Railways has seen the highest freight loading in its history every month since September 2020 till February 2021.

“When we close March 2021, despite the setback of first few months of the lockdown, we will be exceeding last year’s loading in the Indian Railways in terms of freight and it will be the highest freight loading that Indian Railways has seen in its long history,” he said.

On the Bharat Bandh called by farmers” organisations on Friday to protest against the three farm laws, which included train blockade, Goyal said he has been monitoring the situation and in the last report sent to him, he saw that in the whole country some 60 odd trains were disrupted for 5 to 15 minutes.

The minister said this clearly shows that “farmers across the country are happy with these laws”, adding that the three farm laws do not take away anything from what was already existing and they are an added option given to the farming community. Asked about the ‘TRP scam’, Goyal said the investigation will bring to light any wrongdoing and stringent action will be taken against the guilty.

Nielsen predicts revival of FMCG growth; some differ as Covid-19 cases rise

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.

FMCG industry grows 7.3% in Oct-Dec, rural sales up 14.2%: Nielsen

Source: Business Standard, Feb 17, 2021

The FMCG industry in India has recorded a value growth of 7.3 per cent in October-December quarter helped by consumption-led recovery during the festive period and increase in sales from traditional as well as organised trade, according to data analytics firm Nielsen.

The metro market witnessed “significant recovery”, while rural India, which is performing well after a quick recovery from the pandemic, continued to be “buoyant” and witnessed double-digit growth during the quarter under review.

Large manufacturers also bounced back with consumption-led growth during the quarter, while the small ones clocked double-digit growth amid rise in consumption, said the FMCG Snapshot for Q4 2020 released by NielsenIQ’s Retail Intelligence team.

NielsenIQ is a part of global measurement and data analytics company Nielsen.

The Fast Moving Consumer Goods (FMCG) industry in India, saw a bounce back with a growth of 7.3 per cent in the quarter ending December 2020. This growth in Traditional trade (Grocer, Chemist, Paan shops etc.) and Organised Trade (Modern Trade and Ecommerce) was driven by consumption,” it said.

The festive period-led growth uptick in November, was sustained in December also, it added.

In 2020, the FMCG Industry had a value degrowth of 2 per cent.

In October-December quarter, products such as liquid toilet soap, antiseptic liquid, floor cleaner, toilet cleaner in the Hygiene & Immunity building’ categories continued a high-value growth of 46 per cent in comparison to the corresponding 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 a price increase in some food baskets, it said.

This growth recovery was widespread in the food basket, including Staple Foods’ that grew 18 per cent in the December quarter, vs a year ago.

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 an increase in consumption across staples, and home and personal care, said NielsenIQ Lead, Retail Intelligence, India Diptanshu Ray.

The Indian metropolitans, with more than a million population, have come back into the positive growth zone after two-quarters of decline and reported 0.8 per cent growth in October-December quarter.

While, rural markets continued to grow in double digits – accelerating to 14.2 per cent in the October-December quarter, from 10.6 per cent in the July-September quarter.

This sharper recovery is on the back of favourable agricultural sector performance, government action towards rural employment generation, and as rural India had a lesser impact of the pandemic, it added.

Large FMCG manufacturers bounced back with consumption-led growth but small manufacturers, having an annual sales turnover less than Rs 100 crore, continued to exhibit double-digit growth of 16 per cent in the December quarter.

Meanwhile, e-commerce is stabilising at a consumption level higher than pre-COVID. The e-commerce spurt is more prominent in the metros, it said adding that traditional trade channels consolidated its share in the metro markets. Traditional trade channels continued their growth momentum in the December quarter (8 per cent vs year ago), after a 3 per cent growth it clocked in the Sep quarter. Within organised trade, Modern Trade channel has posted a strong recovery to (-) 2 per cent in the December quarter, as against a (-) 15 per cent in September quarter, it added.