The fast-moving consumer goods (FMCG) industry in India has long been a cornerstone of the nation’s economy, reflecting its dynamic consumer landscape. The first quarter of 2024 witnessed significant shifts in consumption patterns, with rural areas surpassing their urban counterparts for the first time in five quarters, according to a report by consumer intelligence firm NielsenIQ.
In the January-March period of 2024, the FMCG industry experienced robust growth of 6.5% in volume terms at the national level. This growth was driven by both food and non-food sectors, with non-food sectors showing nearly double the growth compared to food.
Rural consumption outpaced urban consumption, marking a notable reversal of the trend seen in previous quarters. While urban areas witnessed a sequential decline in consumer demand, rural consumption exhibited an uptick, growing by 5.7% in Q1 2024.
Home and personal care (HPC) categories emerged as frontrunners, outperforming food categories. The growth in HPC was fueled by the popularity of larger pack sizes, while food categories witnessed higher unit purchases.
Modern trade continued to demonstrate strong double-digit volume growth at 14.7%, indicating a preference for organized retail channels. Traditional trade, however, maintained stable growth, suggesting resilience in traditional retail channels amidst evolving consumer preferences.
In the food sector, volume growth stood at 4.8% in Q1 2024, down from 5.3% in the previous quarter. This slowdown was primarily attributed to staples. Conversely, the non-food sector witnessed an improvement, with consumption reaching 11.1%, driven by personal care and home care categories.
The improvement in non-food categories was particularly notable in rural areas, with a growth rate of 12.8% in Q1 2024. This surge underscores the growing importance of rural markets in driving overall consumption trends.
While large players in the FMCG industry continued to demonstrate strong performance, smaller manufacturers witnessed higher volume growth rates in non-food categories over the last two quarters. This trend may be attributed to challenges faced by smaller players in stabilizing prices in the food sector, while non-food categories, buoyed by price increases, experienced higher volume growth.
Looking ahead, the shift in consumption dynamics observed in Q1 2024 underscores the evolving nature of India’s FMCG landscape. Companies will need to adapt their strategies to cater to changing consumer preferences, with agility and innovation being crucial for staying competitive and capitalizing on emerging opportunities in the market.
