India's fast-moving consumer goods industry demonstrated steady growth during the September quarter, registering a 5.4% increase in volumes despite facing temporary disruptions due to the transition to revised goods and services tax rates, according to the latest data from consumer intelligence platform NielsenIQ.
Rural Markets Continue Outperformance
The standout performance came from rural India, which grew faster than urban areas for the seventh consecutive quarter. Rural markets, accounting for 38% of total FMCG volumes, posted a 7.7% year-on-year increase in volumes, significantly higher than the 3.7% growth recorded in urban areas. However, rural growth moderated from the 8.4% expansion seen in the previous quarter.
Urban markets reported a sequential slowdown, with volume growth dropping to 3.7% from 4.1% in the June quarter. "The Indian FMCG sector continues to demonstrate resilience, with rural markets leading the charge for seven consecutive quarters," said Sharang Pant, head of customer success, FMCG, at NielsenIQ India.
GST Transition Impacts Quarterly Performance
The September quarter was marked by significant disruptions as companies transitioned to revised GST rates. This led to temporary de-stocking in trade channels as manufacturers worked to pass on the benefits of lower prices to consumers. The transition resulted in delayed purchases and affected overall volume growth, which moderated from the 6% expansion recorded in the June quarter.
Value sales jumped by 12.9% year-on-year, driven largely by a 7.1% increase in pricing-led growth. The data indicated a clear consumer preference for smaller packs, with unit growth outpacing overall volume growth. Several major companies reported GST-linked disruptions during the quarter:
- Hindustan Unilever Ltd reported flattish volume growth
- Dabur India's quarterly volumes rose 2% with consolidated revenue up 5% year-on-year
Sector-Wide Trends and Outlook
Food categories remained largely stable with 5.4% growth, driven by increased volumes in staples like rice, flour, and spices. However, impulse and habit-forming categories such as snacks and ready-to-cook foods saw declining volumes. Home and personal care segment witnessed slower growth at 5.5% year-on-year.
The expansion of small manufacturers continued to drive FMCG consumption during the quarter, supported by steady volume growth across both food and home and personal care categories. In contrast, large players experienced a consumption slowdown.
E-commerce continued to be a key growth driver, especially in the top eight metros, with its share inching up by 1%. "Omnichannel volume growth remains driven by e-commerce, with modern trade also contributing this quarter," NielsenIQ noted in its report.
Over-the-counter categories posted impressive numbers with a 14.8% increase in value sales, driven by a 9.7% price rise and 4.8% volume growth. With inflation easing, the outlook for consumption remains optimistic, and the full impact of GST changes on consumption patterns is expected to become clearer in the next two quarters.
