Rural FMCG consumption demand 2X faster than urban: NielsenIQ

New Delhi: NielsenIQ (NIQ) released the FMCG Quarterly Snapshot for Q3’24 (JAS’24). According to the report, the Indian FMCG (fast-moving consumer goods) industry has experienced a 5.7% growth in value, reflecting the industry's resilience on 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 the recent decline, while major players trail in value growth.”

Chart 1: Volume growth shows consumer resilience

Source: NielsenIQ, FMCG Quarterly Snapshot Q3’24 (JAS’24)

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. 

Chart 2: Rural areas surpass urban areas for the third consecutive quarter

Source: NielsenIQ, FMCG Quarterly Snapshot Q3’24 (JAS’24)

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

FMCG saw a 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. 

Chart 3: Revival in Food; Non-food volume stabilizes

Source: NielsenIQ, FMCG Quarterly Snapshot Q3’24 (JAS’24)

Chart 4: Consumption of Food grew in Urban and Rural markets

Source: NielsenIQ, FMCG Quarterly Snapshot Q3’24 (JAS’24)

Small players rebound

Large players continue to demonstrate stronger performance compared to small, mid players, and giants. Small manufacturers recovered from the consumption decline of the last 3 quarters & grew faster than giants. This is led by a 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.

Chart 5: Consumption growth driven by large and small players

Source: NielsenIQ, FMCG Quarterly Snapshot Q3’24 (JAS’24)