FMCG witnessed a double-digit growth of 10.6 per cent in Q3'20 in rural India, while the bigger cities of over 1 Lakh population, including metros and Town Class 1, played catch-up, it added.
After an unprecedented decline of 19 per cent in the January-March quarter, the FMCG industry has displayed signs of recovery in the September quarter with a year-on-year growth of 1.6 per cent, according to market insight firm Nielsen.
The growth witnessed in the fast-moving consumer goods (FMCG) sector was also a reflection of positivity witnessed in the overall macroeconomic scenario amid opening up of the economy and easing of lockdown restrictions.
In its India FMCG growth snapshot for the third quarter of 2020, Nielsen said the FMCG slowdown in the second quarter saw a value decline of 19 per cent as compared to the same period of 2019. This was fuelled by massive disruptions in the production and supply chain, and low consumer confidence.
“The unlock from Q3’20, saw a revival in the industry with a growth of 1.6 per cent versus a year ago. The revival was aided by businesses opening up with the pandemic reaching stable levels,” it said.
Markets started opening up in a phase-wise manner and store closures came down to an average of 3 days a month in Q3’20 from an average of 9 days a month in Q2’20. After being cooped at home for a long time, consumers also started looking at resuming normal consumption levels, Nielsen added.
In terms of products, Nielsen said with the opening of the economy all baskets showed signs of recovery, albeit with some clear changes that got reflected in consumers’ product preferences.
“Consumers prioritised spending on essential foods during the locked down quarter and with the unlock quarter this accelerated to double digit growth. We saw an interesting trend in the non-food (Home care and personal care) categories too. The segment registered a movement towards revival with Unlock in Q3’20, indicating a need to move towards normalcy,” it added.
With heightened consciousness around health and wellness, the ‘health and hygiene’ categories have become an integral part of the new normal for consumers and continued to boom in the September quarter as well, Nielsen said in its Q3 snapshot.
“As COVID has prompted consumers to re-frame their habits into health and hygiene, more new launches have been made in the health and hygiene basket, including categories like hand sanitisers, floor cleaners, toilet cleaners, antiseptic liquids,” Nielsen said.
New launches in the health and hygiene space contributed to 37 per cent (in value) of all new launches in the ‘COVID period’. The value contribution of new launches in the health and hygiene category was higher during the ‘COVID period’ at 2.9 per cent, it added.
As far as market geographies are concerned, rural areas continued to drive growth for the FMCG sector.
“With easing of pandemic and markets unlocking in various phases in the third quarter of the year, we saw recovery across town classes with the rural and rest of urban (ROU) regions continuing to lead growth,” it said.
FMCG witnessed a double-digit growth of 10.6 per cent in Q3’20 in rural India, while the bigger cities of over 1 Lakh population, including metros and Town Class 1, played catch-up, it added.
“The rural markets have bounced back handsomely on the back of support provided by the government as well as good agriculture, reverse migration and a lower unemployment rate,” Nielsen said.
Packaged staples and hygiene categories drove faster growth in the rural market.
Nielsen, however, said the impact of the pandemic on consumption patterns is also apparent in the zones of the country.
“Higher rural population and lower incidence of COVID cases in the East and North zone have helped these zones recover faster. On the other hand, the West zone that has a relatively higher urban population and had higher severity of the pandemic continued to decline in Q3’20,” the company added.