FMCG finds relief in Bharat with rural outpacing urban India in revival; these factors helped uplift demand

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Updated: Jul 30, 2020 2:00 PM

After a year of lull in FMCG sales in Bharat, rural India has finally begun to outpace urban India in terms of consumption.

FMCG companies, localised lockdowns, ITC, GCPL, Godrej Consumer, COVID-19 cases, FMCG products, FMCG sectorVarious government policies such as higher allocation of MGNREGA incomes, skilling of migrant workers and other factors such as good monsoon have contributed to rural revival.

After a year of lull in FMCG sales in Bharat, rural India has finally begun to outpace urban India in terms of consumption. “We are seeing a bigger and bigger revival in consumption in month of June. In June, the revival was higher in rural areas than urban India,” Sharang Pant, Head — Retail Measurement and Retail Vertical, Nielsen Connect South Asia, said at Nielsen’s FMCG Q2 Snapshot virtual event on Thursday. Various government policies such as higher allocation of MGNREGA incomes, re-skilling of migrant workers to help them find relevant jobs and Rs 1 lakh crore agri infrastructure fund for farm gate infrastructure for farmers helped in recovery.Other factors such as good monsoon, which led to higher acreage of crops, have contributed to rural revival as well, coupled with a higher availability of water in reservoirs. 

A year ago, major players in fast-moving consumer goods industry reported a demand slowdown which majorly emanated from slowing rural incomes. Rural, which usually accounts for higher consumption than urban counterparts, reported slowing sales number and urban had outpaced rural India in terms of consumption. However, amid coronavirus, rural demand has once again started to pick up. During the months of April, May and June, rural India closed FMCG shops for almost half the number of days as compared to urban India, according to Nielsen data. As a result, it also reported higher recovery in sales as opposed to urban India.

Meanwhile, North and Eastern India are driving FMCG revival with these two regions reporting higher rural recovery numbers. “East has a lot of rural. East should do well in the coming times as well. Rural in North can do even better. In North, lockdowns are for cities, rural is still open and economic activities are taking place,” Sharang Pant said, commenting on how lockdowns in North and East will impact rural FMCG recovery. 

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