In the first quarter of 2020, India’s fast moving consumer goods (FMCG) industry grew at 6.3% — across traditional trade, modern trade and e-commerce — down from 7% in the previous quarter, largely due to the effect of COVID-19 felt in the month of March.
As per market research firm Nielsen, the initial two months of the quarter — January and February — saw signs of recovery before the COVID-19 pandemic impact led to a fall in the growth rate. “There were distinct signs of recovery in January and February, which is considered pre-COVID-19 for the India market. The industry clocked a growth of 7.5% in January and February.
This growth was significantly impacted in March, with the initial effect of COVID-19 bringing growth down to 4%. This led to a slowing down of overall growth for the quarter,” the Nielsen report stated.
In terms of distribution of growth across urban and rural markets, the study found that smaller towns in India with less than 10 lakh population witnessed a significant slowdown in March.
Further, while the slowdown was witnessed across FMCG categories, it was more pronounced in non-food categories.
Interestingly, large manufacturers, classified as those with an annual turnover of over ₹600 crore, continued to witness volume growth in March while the small players with annual turnover of less than ₹100 crore showed agility and grew at 5%.
The medium size companies were the most impacted in the month of March, as per Nielsen.
More importantly, the current quarter is looking to be one of the slowest first quarter of a financial year in terms of growth in the last three years.
“This quarter is turning out to be the lowest first quarter in the past three years. Going forward, we expect FMCG industry growth for second half (H2 i.e.Jul.-Dec.) of 2020 to be in the range of 5-6%, marginally higher than H1 2020,” as per Nielsen.
