FMCG industry growth may remain flat in 2020: Nielsen

Market researcher Nielsen now initiatives India’s packaged shopper items gross sales to shrink or stay little-changed from final yr, slashing its 5-6% development estimate made on April 30 on optimism that the sector would higher stand up to the fallout from the Covid-19 pandemic.

The fast-moving shopper items (FMCG) sector, thought-about comparatively proof against financial recessions, in India is now anticipated to shrink 1% within the worst-case state of affairs, Nielsen stated on Thursday. At finest, it’ll develop 1% in 2020 because the Covid-19 lockdown has crimped demand and severely disrupted commerce channels.

Nielsen expects the festive season to spice up demand and assist FMCG corporations report development within the December quarter. But the outlook for these corporations stays dim as widespread unemployment and a depressed economic system might weaken shopper demand, it added.

“The bellwether FMCG industry, which was trying to revive from a difficult 2019, had a significant hit in the April-June quarter, with a 17% decline in sales value as compared to the same quarter of 2019,” Nielsen stated in its FMCG Q2 report on Thursday.

“Severe and extended lockdowns, restrictions on manufacturing units and movement of people and goods, social distancing norms and store closures, among others, have had a significant impact on the Indian FMCG industry, so much so that industry growth went to a negative zone in the first half of 2020 (6% decline in January-June period),” it added.

However, some early inexperienced shoots have been seen in June when India eased lockdown restrictions. FMCG gross sales registered 4.5% year-on-year worth development in June, suggesting that consumers stepped out to purchase extra items.

Nielsen stated an enchancment in demand can even hinge on how India tackles the surge in Covid-19 instances. “We are expecting some growth in the third quarter, but we are expecting faster growth in the fourth quarter as the festive season will fall more in the December quarter. I wouldn’t be surprised if the third quarter delivered similar growth to that seen in June,” stated Prasun Basu, South Asia zone president, Nielsen Global Connect.

In the quarter to June, development in rural markets and small cities outpaced that of metros. In June, rural markets, which account for 36% of worth gross sales of FMCG, grew thrice quicker than the pan-India development, Nielsen stated.

The pandemic was extreme in Indian metros and concrete centres, in contrast with rural areas. Industry gross sales continued to say no in larger cities in June, Nielsen stated. While all-India development in June was pegged at 4.5%, rural markets noticed worth development of 12.5%.

Basu stated rural will proceed to outperform massive cities pushed by a number of components, together with authorities welfare schemes, fewer positive instances and a comparatively nicely unfold out monsoon, which bodes nicely for the agrarian economic system.