FMCG industry had clocked 13.8 percent growth in 2018.
Market research firm Nielsen India expects growth in the fast moving consumer goods (FMCG) sector to be in the range of 11-12 percent in 2019, two percent lower than 2018's growth of 13.8 percent.
Further, the volume growth which peaked in 2018 to 11 percent is expected to be healthy but lower at 8.5-9.5 percent in calendar year 2019.
Similar growth trends are expected across the key categories - food (12-13 percent), personal care (10-11 percent) and Home Care (10-11 percent).
According to Nielsen, some of the key drivers for the FMCG industry during the current year 2019 will be conducive macro-economic environment, the base effect and the rural growth consumption story.
"The high base especially in Q3 and Q4 of 2018 to the tune of ~16 percent will have an impact on the Q3 and Q4 forecast for 2019 and we expect to be in the high single digit range," said Nitya Bhalla, Data Science Leader, South Asia at Nielsen India.
She also said that Nielsen India analysed past years of elections but did not find any major impact of elections on FMCG growth.
Some of the other drivers that could have a bearing through out 2019 will be rising prices of crude/kopra, exchange rate, reduction in repo rate, policy dynamics on e-commerce, and sustained benefits from GST regime.
The FMCG Industry kickstarted 2019 with double digit value growth of 13.6 percent in Q1 (Jan-Mar) of 2019. This is at a slightly lower note than the last quarter of 2018 calendar year (-2.3 percent from the previous quarter).
Similar sentiments were witnessed in the economy with a 6.6 percent GDP growth in the December quarter of 2018 against an expected 6.8 percent. Inflationary pressure is also seen mounting in recent months from 2 percent in January 2019 to 2.9 percent in March 2019.
The FMCG industry was driven by volume growth of 9.4 percent in Q1 of 2019 contributing 69 percent to the overall value growth.
"While slight drop is witnessed in urban growths, there is a significant softening of growth trends in rural which is dampening the overall FMCG industry growth from Q3 (July-Sep) of 2018 to Q1 (Jan-Mar) 2019," said Bhalla.
Historically, rural has grown 3-5 percentage points faster than urban and the recent slowdown.
The overall drop witnessed in rural growth is majorly driven by slow down in packaged food category.
While there was a slow down across various food categories in rural, the extend of drop was larger in essentials and impulse food categories.
Further analysing the performance by different manufacturer type, Nielsen sees significant growth slow down among small players as compared to large manufacturers.
Nielsen India sees a softening of growth by 1-2 percent sequentially every quarter, leading to healthy double digit growth in the first half of the year followed by a high single digit growth in the second half of the year.They are expecting Q2 (Apr - Jun 2019) to be in the range of 12-13 percent. The Great Diwali Discount!
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