The Indian FMCG industry is showing promising signs of recovery with a double-digit value growth of 10.2% in the March quarter of 2023, according to a report by Nielsen IQ (NIQ). The growth has been attributed to a revival in consumption in rural markets and traditional trade, which had been struggling for over a year. The report also noted that the stabilisation of retail inflation has contributed to the recovery, with price growth dropping to 6.9% in the March quarter from 7.9% in the preceding December-ended quarter of 2022.
The volume growth has also shown positive growth at 3.1%, compared to a negative growth of 0.3% in the December quarter. The volume growth has been improving consistently over the last four quarters, with volumes shrinking by 4.1% in the March quarter of 2022, when price growth was at 10.5%.
The FMCG sector is a crucial part of the Indian economy and the recovery is seen as a positive sign for the country’s overall economic growth. The sector has faced several challenges in the past year due to the Covid-19 pandemic, including supply chain disruptions, reduced demand and increased costs.
The report by NIQ also highlighted that the revival in consumption was driven by essential categories such as food, health and hygiene products, which continue to be the primary focus for consumers. These categories have seen a surge in demand since the pandemic hit the country last year, as consumers are prioritising health and safety.
The report also revealed that there has been an increase in demand for premium products, indicating that consumers are willing to spend more on products that offer better quality and benefits. The premiumisation trend has been observed across categories such as personal care, packaged foods, and home care products.
The FMCG industry’s recovery is seen as a positive sign for the overall Indian economy, which has been struggling with the impact of the pandemic. The industry is a significant contributor to India’s GDP and employment, and its recovery is expected to have a ripple effect on other sectors.
The revival in consumption has also led to an increase in advertising spends by FMCG companies. The report noted that advertising spends increased by 16% in the March quarter compared to the same period last year, with companies investing in both traditional and digital media to reach consumers.
Overall, the report suggests that the FMCG sector is on the path to recovery and is likely to continue to grow in the coming quarters. However, the sector still faces several challenges such as supply chain disruptions and increasing input costs, which could impact growth in the future.
Industry experts believe that the government’s recent measures to boost the economy, including the reduction of corporate tax rates, could further support the growth of the FMCG sector. The government has also announced several measures to support rural growth, including the allocation of funds for rural infrastructure development and the launch of a digital platform to connect farmers with buyers.
The FMCG sector plays a vital role in the Indian economy, contributing significantly to the country’s GDP and employment. The sector is also a major contributor to the growth of rural economies, as it provides employment opportunities and generates demand for agricultural products.
In conclusion, the growth of the FMCG sector in the March quarter of 2023 is a positive sign for the Indian economy. The revival in consumption, driven by rural markets and traditional trade, along with stabilisation of inflation, indicates a path to recovery for the sector. The government’s support measures and the increasing demand for premium products could further boost the growth of the sector in the coming quarters. However, challenges such as supply chain disruptions and increasing input costs must be addressed to sustain the growth momentum in the future.
