Rural markets continue to surpass consumption in urban India: Nielsen IQ

Indian FMCG (fast-moving consumer goods) industry has experienced a 5.7% growth in value, reflecting industry’s resilience on a 1.5% price growth and 4.1% volume growth during the July-September quarter of calendar 2024, reported NielsenIQ (NIQ), a consumer intelligence company.

As per the study, rural continues to outpace urban and notably, rural areas continued to surpass urban areas in volume growth across most regions of India. In Q3 2024, both urban and rural markets showed a sequential recovery in consumer demand. Urban consumption growth in the quarter was 2.8%, while rural growth increased to 6.0% from 5.2% in the previous quarter, 2X faster growth than Urban. Traditional Trade volumes grew by 4.1% in Q3 2024, compared to 3.0% in Q2 2024. Despite the slowdown, Modern Trade also managed to outpace urban growth.

Food volume growth was led by staples, reported Nielsen IQ. FMCG saw slight improvement in volume growth in Q3 2024. Food consumption growth increased to 3.4% in the quarter compared to 2.1% in the corresponding quarter a year ago. This uptick in volume growth was attributed to staple categories – Edible oils, Packaged Atta, and Spices despite price growth. In HPC categories, the quarter saw consumption growth stabilising at 6.0% compared to 6.7% a year ago. This stabilization in consumer demand for HPC (home & personal care) categories was observed in both Urban and Rural.

Roosevelt Dsouza, Head of Commercial – India at NielsenIQ, said, “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 recent decline, while major players trail in value growth.”

Third quarter also saw small players rebound, according to the report. Small manufacturers recovered from consumption decline of last three quarters and grew faster than giants this was led by sharp recovery in volume growth in Food for small players. However, large players continued to demonstrate stronger performance compared to small, mid players, and giants. Giants grow slowest in terms of value growth and their volume growth dropped, Nielsen IQ further said.ends