Rural India leads FMCG growth in Q2, outpacing urban markets

New Delhi: Rural India continued to outpace the urban market in the June quarter with 8.4% volume growth, compared to a 4.6% increase in urban areas, according to the latest report from data analytics firm NielsenIQ.

This is the sixth consecutive quarter when rural India has outpaced urban regions in volume growth. However, the gap is narrowing as urban areas show signs of sequential recovery.

In value terms, India's Fast Moving Consumer Goods industry achieved a 13.9% growth, driven by sustained rural demand and a steady urban recovery.

"The market recorded a 6 per cent rise in volume alongside a 7.4% increase in prices, with unit growth outpacing overall volume growth, signaling a stronger consumer preference for smaller packs," stated the NielsenIQ, FMCG Quarterly Snapshot Q2’25.

The urban markets are now showing a resurgence, primarily driven by smaller towns, while metropolitan areas continue to experience a decline in consumption owing to channel shift, the report added.

While sharing segment-wise consumption data, the report said in the June quarter, food consumption largely remained stable at 5.5%, driven by increased volumes in staples and impulse categories.

"Meanwhile, Home and Personal Care (HPC) saw stronger momentum, with 7.5% consumption growth," it said.

Over the counter categories (which mainly include some products commonly sold through pharma channels) posted a 14.2% increase in value sales, which was largely driven by an 11% rise in prices.

Among the sales channels, e-Commerce continued its shine, helped by fast-paced growth from hyper delivery platforms. It continued its upward trajectory, gaining ground in eight Metros on modern trade (MT) channels, which include shopping arcades and hyper malls.

"Southern metros are leading the e-commerce charge, with a higher share at 18.4%, compared to 15.8% in eight Metros in Q2’25," it said.

The report further added even though e-commerce accounts for just 11–13% of FMCG value share in Metros, it’s already delivering more than half of the omnichannel growth.

"Despite the pullback of quick commerce dark stores, Q2’25 consumption in e-commerce surged, driven by higher shopper penetration and consistent spending, even among new shoppers," it said.

Moreover, small manufacturers continued to drive FMCG consumption in Q2 2025, supported by steady volume growth across both Food and HPC categories on a lower base.

"In contrast, large players saw stable growth. A combination of strong rural demand and easing inflation has enabled small players to outperform overall industry growth," it said.