Rural Markets Continue To Surpass Consumption In Urban India: NielsenIQ

* Consumption-driven value growth (5.7%), price growth (1.5%) remains flat

* Rural value growth at 6.7% continues to stay ahead of Urban at 5.0%

* Staples led Food recovery (3.4%) while Home & Personal Care (HPC) volume stabilizes at 6.0%

NielsenIQ (NIQ), the world's leading consumer intelligence company, released the FMCG Quarterly Snapshot for Q3’24 (JAS’24). According to the report, Indian FMCG (fast-moving consumer goods) industry has experienced a 5.7% growth in value, reflecting industry's resilience on a 1.5% price growth and 4.1% volume growth.

Roosevelt Dsouza, Head of Commercial – India at NielsenIQ, stated, " The Indian FMCG industry shows resilience with steady value growth and marginal price increase. Rural volume growth at 6% continues to surpass urban markets, despite softer consumption in both regions this quarter. Small manufacturers are rebounding after recent decline, while major players trail in value growth.” 

Market Dynamics: Rural continues to outpace urban

In Q3 2024, both urban and rural markets showed a sequential recovery in consumer demand. Urban consumption growth in Q3’24 is 2.8%, while rural growth increased to 6.0% from 5.2% in the previous quarter, 2X faster growth than Urban. Notably, rural areas continue to surpass urban areas in volume growth across most regions of India. Traditional Trade volumes grew by 4.1% in Q3 2024, compared to 3.0% in Q2 2024. Despite the slowdown, Modern Trade manages to outpace urban growth.

Festive signs emerging: Food volume growth led by staples and impulse    

FMCG saw slight improvement in volume growth in Q3 2024. Food consumption growth increased to 3.4% in Q3’24 compared to 2.1% in Q2’24 (refer to Chart 3). This uptick in volume growth is attributed to Staple categories – Edible oils, Packaged Atta, and Spices despite price growth. In HPC categories, the consumption growth stabilizes at 6.0% in Q3’24 compared to Q2’23 at 6.7%. This stabilization in consumer demand for HPC categories is observed in both Urban and Rural.

Over the Counter categories like Rubefacient, Analgesics exhibited a growth in value sales to 11.7% in Q3’24 backed by price growth.

Small players rebound

Large players continue to demonstrate stronger performance compared to small, mid players, and giants. Small manufacturers recovered from consumption decline of last 3 quarters & grew faster than giants this is led by sharp recovery in volume growth in Food for small players. Giants grow slowest in terms of value growth; and volume growth drops compared to AMJ’24.