Rural markets reported a 5.3% dip in volumes, the very best reported decline within the final three quarters, the researcher stated. In city centres, volumes declined 3.2%. Rural markets reported worth progress of 6.6%, whereas city markets grew 5.6% in worth phrases.
“A decline in consumption is echoed throughout all zones and the city courses, however extra outstanding in rural markets, which sees a 5.3% dip—the very best consumption slowdown within the final three quarters. The south and north zones witnessed greater than 5% quantity decline,” it added.
Most massive shopper items firms flagged consumption slowdown within the March quarter which they stated was pushed by inflation hurting family budgets. This was additionally evident in greater demand for smaller or worth packs and corporations reporting softer quantity progress.
Corporations additionally undertook aggressive worth hikes to counter excessive inflation. NielsenIQ’s analysis identified that rural markets witnessed greater worth will increase when in comparison with city markets, with costs rising 11.9% year-on-year in rural pockets in contrast with 8.8% in city markets in the course of the March quarter. Greater worth hikes might have been taken on packs offered in rural India additionally within the type of decreasing grammage.
This led to a larger consumption decline in India’s villages.
“In continuation from final 12 months, macro-economic indicators are nonetheless guiding consumption patterns for the Indian shopper, and they’re feeling the impression of the value improve particularly within the meals and necessities classes”, stated Satish Pillai, managing director, India, NielsenIQ.
Pillai stated that whereas world macro-factors such because the warfare in Ukraine, that’s driving up commodity inflation, persist any impetus by the federal government, if supported by a standard monsoon, can be encouraging for the business.
Though the decline in volumes was unfold throughout classes, it was extra pronounced within the non-food classes as shoppers prioritised spending on important objects.
For example, packaged meals, which contribute 61% to FMCG gross sales by worth, declined 1.8% year-on-year in the course of the quarter. In distinction, volumes in non-food classes had been down 9.6% in the identical interval.
“Inside meals, impulse beats the slowdown with a constructive quantity progress of 1.5% with shoppers specializing in smaller packs within the class seen in salty snacks, goodies and confectionary. The staples product basket with classes similar to refined and non-refined edible oil, vanaspati, packaged atta have proven a virtually 15% worth improve,” it stated.
In the meantime, gross sales through trendy commerce have stabilised in latest quarters, NielsenIQ stated, with quantity progress on the uptick. Within the March quarter, FMCG volumes grew 5.3% through the commerce channel. Conventional commerce reported a 4.9% decline in volumes led by a shift in the direction of smaller packs. E-commerce grew 5.6% on 12 months.
Sonika Gupta, buyer success lead (India), NielsenIQ, stated shoppers had been seen scaling again extra on discretionary spends inside the non-food classes. “General, there may be an evident shift by shoppers to smaller pack sizes to handle exterior elements for each meals and non-foods,” Gupta stated.
Corporations too reported related tendencies within the March quarter.
Vatika oil maker Dabur India reported a “setback” in rural demand. “For us, up to now couple of quarters, our rural was all the time firing forward of city. Nonetheless, what we discovered on this quarter is a liquidity crunch and demand compression in rural India. Due to this fact, our credit score (cycle) has additionally gone up in rural India. Rural is the one which isn’t doing so effectively for us for the time being,” the corporate’s chief govt Mohit Malhotra stated in the course of the quarterly earnings name held final month.
Mumbai-based Hindustan Unilever Ltd., reported flat quantity progress within the March quarter.
“As a result of unprecedented inflation, FMCG market worth progress has considerably slowed down and volumes are declining in excessive single digit. The impression is extra pronounced in rural, the place even worth progress has began declining. Shoppers are tightening volumes and necessities are being prioritized over discretionary classes,” the corporate’s administration stated in the course of the March quarter earnings name held on 27 April.
Supply: Live Mint