The Wire Staff 
New Delhi: The fast-moving consumer goods (FMCG) sector is expected to grow at 4.5-6.5% in 2024, sharply lower than the robust 9.3% growth experienced in 2023 and 8.4% in 2022, according to NielsenIQ.
In the December quarter, the FMCG sector grew 6.4% in volumes on the back of positive consumption across the country, NielsenIQ said.
The rate of consumption growth, in terms of both volume and value, within the FMCG sector decelerated sequentially across the entire country.
The trend was seen in both urban and rural markets, where volumes grew year-on-year but dipped sequentially, Mint reported, citing the report.
The volume growth in the urban sector during the October-December quarter stood at 6.8% as compared to 10.2% in the previous quarter. Rural volume growth stood at 5.8% against 6.4% in the July to September quarter, the Economic Times reported, citing the report.
The value growth in the industry stood at 6% in the quarter. This has been attributed to the 6.4% rise in volume. Therefore, this indicates positive consumption patterns at an all-India level, the report said.
The report also added that the volume growth in the food sector during the October-December quarter stood at 5.3%, down from 8.7% in the July-September quarter of 2023. This was attributed to the slowdown in the products under staples (such as refined and non-refined edible oils, etc.) and impulse (such as confectionery, etc.) categories.
Within the non-food categories, which include personal and home care products, there is an improvement, with volume growth reaching 9.6% in the quarter ended December as compared to last year. This is an increase from the 8.7% recorded in July-September.
Note that growth in terms of volume refers to the increase in the physical quantity of goods sold over a specific period, irrespective of changes in pricing. This reflects the actual demand for the products. This aspect is important to understand consumer demand.
On the other hand, growth in value terms refers to the increase in sales revenue or market value of FMCG products over a specific period. It takes into account factors such as price increases. It indicates how well a company is performing in terms of generating revenue from its products.
Narrowing rural-urban gap
However, despite the anticipated slowdown, Nielsen remains optimistic about the FMCG industry’s prospects.
Roosevelt Dsouza, head of customer success at NielsenIQ India, despite a sequential-quarter decline, the rural recovery narrative continued to evolve throughout the year.
He highlighted that in 2023, for the first time, consumption gaps between urban and rural markets narrowed.
“The northern and western regions are contributing to this phenomenon. The favourable interim Union Budget 2024-25, supporting several economic boosters for the rural sector, should augur well for companies with a rural strategy,” Dsouza said.
“In Q4 2023, we observe an uptick in consumption, primarily driven by habit-forming categories (such as biscuits and noodles) in food and essential home products. These categories have thrived despite flat to negative price growth, indicating resilience and sustained demand,” he said.
Also read: Rising Thali Cost, Muted Fmcg Growth, Booming Luxury Sales: Why the K-Shaped Recovery Still Stands
But FMCG firms say there’s a slowdown in rural demand
Mint quoted market analysts expressing their dissatisfaction with the findings.
FMCG companies have raised concerns about a persistent slowdown in rural demand.
“There is a definite slowdown,” Krishnarao Buddha, senior category head, marketing at Parle Products told Mint. “Both rural and urban markets have slowed down. Errant monsoon in select geographies due to the El Niño has impacted slowdown in consumption. There is also a normalizing effect post-COVID,” Buddha said.
“Overall sector growth continues to wane, with price growth turning negligible. Urban growth has seen moderation and is now growing 1.2X rural. The low base aids non-food volume recovery, while food categories are seeing volume growth moderation. Channel growth has moderated, but modern trade continues to clock healthy growth,” Nitin Gupta of Emkay Global Financial Services, told the business daily.
In November, Business Standard had reported that persistent low demand in the FMCG sector is causing supply chain congestion, leading to an increase in inventory days, with stocks accumulating at distributors.