The report revealed that the non-foods categories basket saw a dip in average pricing due to the increased contribution of larger packs in the consumer basket.
The fast-moving consumer goods (FMCG) industry clocked 9.4 percent year-on-year growth in the first quarter (January-March) of the calendar year 2021, according to the FMCG Snapshot for Q1 2021 released by NielsenIQ’s Retail Intelligence team.
As per the report, the surge came on the back of strong growth in staples, essential non-foods, and indulgence categories.
“The recovery in Indian FMCG industry growth that we had seen in the last quarter has strengthened further in January-March, 2021. This is backed up by staples, essential non-foods, and indulgence categories. However, the beginning of the second quarter may bring some new dimensions, as the situation is dynamic across the country," said Diptanshu Ray, NielsenIQ South Asia Lead.
Though the industry, as per Nielsen, had grown at 7.3 percent in the previous quarter (October-December, 2020), it had faced headwinds in the previous quarters of 2020 due to supply chain disruptions and manpower shortage in the wake of the COVID-19 pandemic. According to the market research firm, FMCG reported a 19 percent contraction in the April-June 2020 quarter and 0.9 percent growth in the July-August quarter of last year.
The growth in the current quarter was led by consumption across the segments foods as well as non-food.
“Foods basket got a boost from pricing uptick, mainly in staples categories like edible oils and packaged tea. Increased home consumption also led to growth certain categories in non-staple foods categories as well biscuits, coffee, cheese, ketchup,” said the Nielsen report.
The report revealed that the non-foods categories basket saw a dip in average pricing due to the increased contribution of larger packs in the consumer basket and the rise in consumer promotions in essential home care and personal care categories.
The foods category grew 13 percent during the quarter, while non-foods grew 3 percent as compared to 6 percent and 0 percent growth, respectively in the same period last year (January-March 2020).
Other interesting findings of the FMCG snapshot by Nielsen showed that rural markets continued their growth momentum at 14.6 percent from 14.2 percent in the previous quarter (October-December 2020). However, metropolitan cities registered a positive growth (2.2 percent) in the first quarter, after two quarters of the declining trend versus the year-ago period.
Nielsen expects the rural growth to sustain for this year too.
“This year is expected to have a good monsoon making it the third consecutive year of rural rejoice. This had a boost-up effect on the earnings of agrarian households and kept rural sentiments upbeat. Besides, increased focus on MGNREGA in terms of bigger outlay; rise in wages and increase in MSP of key crops have been instrumental in keeping FMCG consumption in rural markets buoyant,” it said.
Traditional channels, which include general trade or kirana stores, too, continued their growth trajectory at 11 percent versus a year-ago period, after an 8 percent growth they clocked in the December quarter.
Among the organized channels, sequential (quarter on quarter) recovery was witnessed in modern trade, however, it is still in a negative SPLY growth zone because of a higher base of 2020.
The peak witnessed in e-commerce, on the other hand, growth continued to taper off and the channel registered 15.7 percent growth in the first quarter.
“E-commerce sales peak in the unlock quarter (July-September, 2020) tapered off; the channel is settling into new normal growth. There are green shoots of personal care categories’ growth coming back while snacking and impulse foods-basket maintained growth trajectory,” the report said. Now that lockdowns have resurfaced, and with last-mile delivery boost up, the e-commerce channel will continue to be dynamic, it added.