India’s FMCG industry is expected to post value growth in the range of 7-9% for the whole of 2023 despite global uncertainties, according to the latest NielsenIQ forecast. This stems from the sector’s double-digit value growth rate of 10.2% in Q3 (vs 7.6% in Q12) and positive output growth of 3.1. % after 5 quarters.
Regarding the annual growth forecast for the industry, the research and insights firm noted that pressures on consumers and high unemployment could act as headwinds. However, it added that factors such as the government’s focus on agriculture and capital investment, GDP growth forecasts, tax regime revisions and normal monsoon forecasts will act as directional winds.
Fast-moving consumer goods sector growth was driven by a recovery in consumption in rural markets and in traditional trade, which has been under pressure for more than a year. The revival of rural consumption with a growth of 0.3% in volume is led by the South and East regions. Urban consumption maintained its growth momentum (up 5.3% in volume) in both food and non-food categories.
“The positive domestic consumption growth recorded in the quarter is encouraging. Urban India continues to be the engine of growth in terms of value growth, with organized retail seeing high double-digit growth in modern commerce,” said Roosevelt D’Souza, City Leader of Indian Customers, NIQ said. However, the reduction in weight and the move to smaller packages continued. Consumption growth improvement due to more units of product consumed; However, it does note that changes to larger packages are pending.
Revitalize the non-food sector
The food segment continued to see higher consumption growth with a growth rate of 4.3% in volume at the pan-India level driven by an increase in staples. Meanwhile, output growth of the non-food segment turned positive (0.2%) after 6 quarters, led by the home care category but personal care continued to decline.
Satish Pillai, Managing Director – India, NIQ said: “The falling inflation rate also leads to lower inflation for food categories and provides an opportunity for cautiously optimistic consumers.” He added that consumers are now more willing to buy.