FMCG consumption witnesses slowdown amid price growth taper: Report

In the retail space, Modern Trade channels maintained a double-digit value growth of 23.3 per cent and volume growth of 12.6 per cent on a year-on-year basis.

While the FMCG sales from traditional trade channels such as Kirana stores "witnessed continuous negative consumption growth (- 1.5 per cent) for the fifth consecutive quarter".

"Consumers continue to feel inflationary pressure while manufacturers also continue to move away from promos to maintain the margins," said Sonika Gupta, Customer Success Lead (India), NielsenIQ.

Moreover, consumers continued to prefer purchasing smaller packets at both traditional and modern trade outlets, the report added.

A decline in volume was witnessed in the December quarter, volumes shrank 0.3 per cent year-on-year (YoY) compared to 0.7 per cent contraction in July-September.

Price growth during the quarter was 7.9 per cent, lower than 9.9 per cent in the previous quarter.

Non-Food consumption continues to decline across buckets and sees lower volumes than pre-Covid levels in the recent few quarters.

The release also stated that manufacturers are also reducing promos for categories like washing powder, detergent bars, toilet soaps, shampoo,etc.
Re-evaluation of the portfolio strategy becomes even more important to address the intensifying competition from smaller players as they make a comeback.

Northern parts of the country witnessed volume growth in consumption by 0.1 per cent, after five quarters, while the east remained stable with volumes at 0.6 per cent. Western and southern regions continued to witness contraction in consumption.

Citing reasons for the decline in the non-food non-food segment of fast moving cosumer goods, NielsenIQ said in its release that there was a lean assortment at retail outlets, and stock levels were also lower.

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Growth was seen in the food sector, especially in food staple grains and pulses. Non-food consumption continued to decline, witnessing lower volumes than pre-Covid levels in recent quarters.

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In the west, consumption stood at 0.9 per cent due to a slowdown in the urban areas and a continued decline in rural. In the south, it contracted 0.9 per cent.

“The slowdown in the south and the west is driven by the food bucket - consisting of staples, impulse & habit forming categories. For staples & impulse, the decline is seen due to high positive growths in the previous year, unlike other zones," NielsenIQ said in its release.