The fast-moving consumer goods (FMCG) manufacturers would witness even softer growth in the October-December 2019 period. Projections by market research firm Nielsen indicate that growth in Q4CY19 could be in the range of 6.5 to 7.5 percent. This can be compared to the 7.6 per cent growth that the FMCG sector saw in Q3CY19. Nielsen has retained its annual growth forecast for 2019 for the FMCG market at 9-10 percent. In the last quarter, Nielsen had revised lower its earlier growth forecast of 11-12 percent.

Rural India, which contributes 36 percent to overall FMCG spends, has had its worst performance in seven years. Rural which was growing at 20 per cent in Q3CY18 has grown only 5 per cent in Q3CY19, according to data from market research firm Nielsen.

More stress in rural

In its recent earnings, FMCG major Hindustan Unilever said that rural grew only 0.5x urban in the quarter gone by. Historically, rural has always grown 1.5x-2x urban.

“Expect a bit more of slowdown in the next quarter and therefore more stress in rural. We are hoping that government initiatives will help revive consumption,” said Sunil Khiani, Head - Retail Measurement Service, Nielsen South Asia.

However, Nielsen expects a consumption revival in 2020. Initial trends suggest that there is a pick-up in momentum in the modern trade segment.

“Modern trade is showing the first signs of recovery ahead of the festive season. FMCG growth in this channel is growing at 13 percent in Q3CY19 against Q2CY19,” said Nielsen in a press statement.

On the back of these buying trends, favourable government policies and steps taken by the centre to boost consumption, Nielsen expects the revival. The market research firm has projected FMCG growth in Q1CY20 (January to March) to be in the range of 7.5 – 8.5 per cent.

First Published:Oct 17, 2019 7:43 PM IST