Rural consumer goods consumption back to growth in March quarter, says report

Rural consumer goods consumption back to growth in March quarter, says report

10 May    Finance News, FMCG, Industry

The consumption of consumer goods in rural India returned to growth after more than a year in the March quarter and is expected to grow for the rest of the year, market analytics firm NielsenIQ said, as inflation and price hikes eased. The increase in product prices slowed to 6.9% from January to March, from 7.9% in the previous quarter, helping consumption in rural India increase 0.3%, after six quarters of decline, NielsenIQ said in a report on Wednesday. Several Indian consumer goods makers, including Parachute hair oil manufacturer Marico, Fortune cooking oil seller Adani Wilmar and Dove soapmaker Hindustan Unilever have cut prices as commodity costs come off their highs.

“More than 2/3rd of India’s population resides in rural areas,” NielsenIQ Managing Director Satish Pillai said. “The upward trends seen in rural markets is particularly encouraging, and may be the turning point for the industry.” However, NielsenIQ said consumers have not fully returned to buying bigger packs, as consumers living paycheck to paycheck are increasingly buying smaller packs of consumer goods to save cash.

Consumption in urban areas was steady, rising 5.3% in the first three months of the year, bringing the overall volume growth to 3.1% for the period. That, along with the price hikes and a demand rebound in mom-and-pop stores, helped boost the overall value of sales by 10.2% in the first quarter.

NielsenIQ expects the value of sales to rise 7%-9% for the whole of 2023, higher than the 8.4% increase in 2022, benefiting from likely timely monsoon as well as the central bank’s expectations for the Indian economy to expand. Consumer goods makers have, so far, reported mixed earnings for the March quarter: toothpaste maker Dabur India posted shrinking margins, while Pepsi-bottler Varun Beverages recorded profit growth. Meanwhile, a Reuters poll of economists found India’s consumer inflation likely cooled to an 18-month low in April as fuel prices moderated, potentially setting up consumer goods makers for sales gains in the April-June quarter. 

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