IBEF: November 27, 2020
According to Nielsen, the FMCG industry shows signs of improvement in the September quarter with a year-on-year rise of 1.6%.
The growth in the fast-moving consumer goods (FMCG) sector mirrored the positivity seen in the overall macroeconomic scenario as the economy opened up and lockdown restrictions relaxed. Businesses reopening with the pandemic reaching manageable levels supported the recovery.
“Markets began to open up in a phase-wise way and store closures in Q3’20 decreased to an average of 3 days a month from an average of 9 days a month in Q2 Consumers also began looking at resuming regular consumption levels after being cooped at home for a long period of time,” Nielsen said.
In terms of goods, Nielsen stated that all baskets showed signs of recovery with the opening of the economy, although with some significant improvements that reflected consumer product preferences.
Nielsen said, “In the locked down quarter, customers preferred spending on essential commodities and this accelerated to double-digit growth with the unlock phases. In the non-food (home care and personal care) groups, we saw an interesting pattern, too. The segment registered a movement towards recovery with Unlock in Q3’20, suggesting a need to step towards normalcy.”
The ‘health and hygiene’ categories have become a significant part of the new normal for consumers with increased concern about health and wellness and continued to boom in the September quarter as well, Nielsen said in his Q3 snapshot.
Nielsen said, “More new launches have been made in the health and hygiene basket, including categories such as hand sanitisers, floor cleaners, toilet cleaners, antiseptic liquids, since COVID has encouraged consumers to re-frame their habits into health and hygiene.”
In the ‘COVID period’ new launches in the health and hygiene space contributed to 37% (in value) of all new launches. In the ‘COVID period’ at 2.9%, the value contribution of new launches in the health and hygiene group was higher.
Nielsen said, “In the third quarter of the year with the easing of the pandemic and markets unlocking in different phases, we saw recovery across city groups, with development continuing in the rural and rest of urban (ROU) regions.”
FMCG experienced a double-digit growth of 10.6% in Q3’20 in rural India, while the urban areas of over 1 Lakh population, including metros and Town Class 1, played catch-up, it added.
"The rural markets have bounced back supported by the government as well as good agriculture, reverse migration and a lower unemployment rate," Nielsen said.
In the rural market, packaged staples and hygiene categories drove faster growth.
However, Nielsen said the effect of the pandemic on consumption habits is also evident in the country's regions.
These areas have been helped to recover more rapidly by a higher rural population and a lower rate of COVID cases in the East and North Zones. On the other hand, in Q3'20, the West region, which has a relatively higher urban population and higher pandemic intensity, continued to decline.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.