Business

Nielsen cuts FMCG growth forecast to 9-10%

Tasty growth: Nielsen expects food categories to grow at a higher rate at 10-11%. Arunangsu Roy Chowdhury

Tasty growth: Nielsen expects food categories to grow at a higher rate at 10-11%. Arunangsu Roy Chowdhury  

Softening demand across food, non-food categories; impact more in rural areas

Market research firm Nielsen has lowered its growth forecast for the fast-moving consumer goods (FMCG) sector to about 9-10% in 2019, from the earlier expectation of 11-12%, on the back of softening demand across all food and non-food categories.

In a report released on Wednesday, Nielsen also noted that the impact of slowdown was seen more in rural areas than urban.

Rural India

Rural India accounts for nearly 37% of overall FMCG spends, and has been growing around 3-5 percentage points faster than urban on account of increasing affordability, availability and demand.

“However, rural growth is slowing down at double the rate of urban in recent quarters,” the report said.

The FMCG growth for H1 2019 (January-June) stands at 12% as against a prediction of 13-14%, the report said, adding that, “Based on an analysis of key factors, a revised forecast for the year-end of 2019 put all India FMCG growth to be in the 9%-10% range.” Within this, the research firm expects food categories to grow at a higher rate at 10-11%, whereas personal care and home care are expected to grow in the 7-8% respectively.

2018 growth as expected

In 2018, the sector saw a growth of 13.6%, in line with an expectation of 13-14% growth. According to the report, in Q2 2019 (April-June ), FMCG value growth dropped to 10% “inching towards a slowdown.”

“At the beginning of the year, we saw softening driven by essential and impulse food categories, however, this quarter has witnessed a slowdown across all food as well as non-food categories with salty snacks, biscuits, spices, toilet soaps, and packaged tea leading the slowdown,” it said.

The report noted that Haryana, Madhya Pradesh, Uttar Pradesh, Maharashtra and Assam were leading the slowdown.

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Printable version | May 27, 2020 6:28:36 PM | https://www.thehindu.com/business/nielsen-cuts-fmcg-growth-forecast-to-9-10/article28526562.ece

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