The FMCG industry's volume growth during August-October this year has dropped to 4.3 percent from 6.4 percent in the year-ago period, research and insight firm Kantar said in a report.
The FMCG volume growth was lower sequentially also, as in the May-July period, this was 4.5 percent, according to Kantar's latest FMCG Pulse report.
"We are in that last quarter, and the FMCG growth as of the quarter ending October is 4.3 percent. This number is a far cry from the 6.4 percent growth seen in Q/E Oct '23, but is also a tad lower than the 4.5 percent we saw in the last quarter, i.e., Q/E Jul '24," it said.
Volume growth in the urban market was at 4.5 percent in the August-October period, down from 6.9 percent in the same period of 2023.
"It is also true that a 4.5 percent growth following a near 7 percent growth in the previous term is extremely rare. In fact, over the last five years, this has only happened in the quarters of 2024." Therefore, technically urban areas are in a slowdown, though "it is far from a slump," the report added.
About the inflation, the report said that per-household average quarterly spending crossed Rs 6,000 for the first time in the August-October period of 2022, and two years since then, spending has seen a 13 percent jump and is at Rs 6,761 during this quarter.
In May-July 2024, shoppers were paying Rs 133 per KG of FMCG on average. Just one quarter since then, shoppers are paying Rs 137 per KG, a jump of Rs 4 per KG in the latest August-October period.
"In recent years, this kind of growth in a single consecutive quarter was only seen during the initial months of the 2022 inflation period," it said.
With no signs of food inflation relenting in the immediate future, where value growth rapidly draws away from volume growth for some more time, it's hard to see urban (market) growing more rapidly than the current levels.
"We are expecting similar levels of growth to continue into the first half of the next year," it said.
About the rural market, Kantar said it also seemed "underperforming" with just 4 percent growth, which is even slower than the 4.5 percent growth of the urban market in the August-October period.
However, it also added this was led by the mega category, wheat flour (atta). "Non-atta rural FMCG growth is stable linearly and is growing seasonally," it said.
Personal care categories have seen a strong jump from 2.8 percent to 5.4 percent in August-October, 2024, compared to a year ago. This is a good indicator of a positive market, and the extent of growth here gives us more confidence in the rural market, it added.
"Rural also has seen a near 11 percent CFPI (food price inflation), and this has resulted in a similar value growth differential here," it said.
There are some concerns over rainfall for the rabi season, but a major stress is not expected, it said.
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