FMCG Sees Growth in Rural Areas in March: Promising Growth for Industry

Fast-moving consumer goods (FMCG) experienced 17.5% growth in rural areas in March, while urban areas experienced 6.1% growth. FMCG sales increased by 14.1% year on year in March, according to monthly data issued by Bizom, a retail intelligence platform that measures consumer goods sales across 7.5 million locations.

Beverages and personal care saw negative growth of 1.5% and 9.5%, respectively, whereas commodities, packaged foods, home care, and confectionary saw positive growth.

"A strong increase in the number of kirana outlets in rural areas by nearly double digits YoY contributed to strong growth in FMCG sales in March 2023. Rural areas saw some of the stock push for summer products at kirana stores, as well as driving year-end sales in March 2023," said Akshay D'Souza, Bizom's Chief of Growth & Insights.

According to ICICI Securities, rural demand remains weak in comparison to metropolitan demand. With major commodity prices softening, FMCG companies have implemented price cuts and grammage increases in the last six months. This is expected to result in an increase in volume in Q4FY23.

"We anticipate 9.8 percent revenue growth in our FMCG coverage universe in Q4FY23, driven by a combination of volume and pricing," says an ICICI securities preview on FMCG. We expect food inflation to trend lower globally in FY24. Also, with the competitive environment for FMCG intensifying in India, we expect to see price drops across categories, which might help improve consumption," D'Souza noted.

Companies reported an increase in demand for FMCG products following a downturn. "Demand was a little low last month due to high fluctuations in food product and edible oil rates. However, rates are now stable, and we anticipate strong demand this month," says Ashish Khandelwal, Managing Director of BL Agro.