New Delhi, Dec 24 (PTI) Heading towards a slowdown amid inflationary pressures, the FMCG industry’s volume growth during August-October this year has dropped to 4.3 per cent from 6.4 per cent in the year-ago period, research and insight firm Kantar said in a report.
Moreover, the FMCG volume growth was lower sequentially also as in the May-July period, this was 4.5 per cent, according to Kantar’s latest FMCG Pulse report.
“We are in that last quarter, and the FMCG growth as of the quarter ending October is 4.3 per cent. This number is a far cry from the 6.4 per cent growth seen in Q/E Oct ’23, but is also a tad lower than 4.5 per cent we saw in the last quarter, i.e. Q/E Jul ’24,” it said.
Volume growth in the urban market was at 4.5 per cent in the August-October period, down from 6.9 per cent in the same period of 2023.
However, the report added: “It is also true that a 4.5 per cent growth following a near 7 per cent growth in the previous term is extremely rare. In fact, over the last five years, this has only happened in the quarters of 2024.”
Therefore, technically urban is in a slowdown, though “it is far from a slump”.
About the inflation, the report said that per-household average quarterly spending crossed ₹6,000 for the first time in the August-October period of 2022, and two years since then, spending has seen a 13 per cent jump and is at ₹6,761 during this quarter.
In May-July 2024, shoppers were paying ₹133 per KG of FMCG on average. Just one quarter since then, shoppers are paying ₹137 per KG, a jump of ₹4 per KG in the latest August-October period.
“In recent years, this kind of growth in a single consecutive quarter was only seen during the initial months of the 2022 inflation period,” it said.
With no signs of food inflation relenting in the immediate future, where value growth rapidly draws away from volume growth for some more time, it’s hard to see urban (market) growing more rapidly than the current levels.
“We are expecting similar levels of growth to continue into the first half of the next year,” it said.
About the rural market, Kantar said it also seemed “underperforming” with just 4 per cent growth, which is even slower than the 4.5 per cent growth of the urban market in the August-October period.
However, it also added this was led by the mega category, wheat flour (atta).
“Non-atta rural FMCG growth is stable linearly and is growing seasonally,” it said.
Personal care categories have seen a strong jump from 2.8 per cent to 5.4 per cent in August-October, 2024, compared to a year ago. This is a good indicator of a positive market, and the extent of growth here gives us more confidence on the rural market, it added.
“Rural also has seen a near 11 per cent CFPI (food price inflation), and this has resulted in a similar value growth differential here,” it said.
There are some concerns over rainfall for the rabi season, but a major stress is not expected, it said.
