India’s fast-moving consumer goods (FMCG) industry grew 12.2 percent in value in the April-June quarter of 2023 driven by higher consumption growth, according to data from NIQ India (formerly NielsenIQ).

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The industry recorded a volume growth of 7.5 percent, the highest in the last eight quarters. Price growth came in at 4.4 percent, which is the lowest in at least nine quarters.

This comes after the FMCG industry saw high inflation translating into price-led growth for over two years. FMCG companies too, have indicated that price-led growth has started tapering off and volume-led growth is set to return in the next few quarters.

For the last quarter, the FMCG industry grew 10.2 percent year-on-year (YoY) in value last quarter, while volumes grew 3.1 percent. The industry saw price growth of 6.9 percent in the January-March quarter.

“Q2 of FY23, thus far, is the best quarter in a year and a half, with positive strides across all growth vectors we track. Recovery in rural markets which was in negative territory for the last few quarters, is primarily driven by non-food.

This combined with a 21 percent growth in Modern Trade augers well for the upcoming festive seasons,” Roosevelt D’Souza, Lead, Customer Success, NIQ India said in a statement.

Rural markets too, saw some recovery with volumes growing four percent YoY as compared to a flat growth of 0.3 percent last quarter and a degrowth of 2.4 percent in the same quarter last year. Urban markets continued momentum with consumption growth of 10.2 percent, which is double the 5.3 percent growth it saw last quarter.

From a category point of view, NIQ India says the Foods category saw volumes grow 8.5 percent in the quarter driven by staples and Impulse categories. It adds that consumers are leaning back towards Habit Forming categories in cities and metros.

Within the non-food categories, there is also an improvement to 5.4 percent in Q2 of FY23 (from 0.2 percent in Q1 of FY23). NIQ India attributes this to a revival in rural consumption growth (1.4 percent in Q2 of FY23 from -3.9 percent in Q1 of FY23), through the home care categories while personal care categories continue to see a decline in rural areas.

In the retail space, modern trade continues to see double-digit consumption growth (21.1 percent) while traditional trade sees an improvement to 6.2 percent in Q2 of FY23 from 1.9 percent in Q1 of FY23.

"The softening of India’s inflation rate and the decline in food inflation is good news for the industry. This has led to confidence in spending reflected in retail channels across the country that are growing”, said Satish Pillai, MD of NIQ India.

"Further, the overall drop in price growth driven by the food categories has also had a positive impact on consumers and is anticipated to be mirrored in the build-up to the festive season,” he added.

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First Published:Aug 10, 2023 5:45 PM IST