FMCG sector clocks lowest Jan-Mar quarter growth in three years; likely to grow by 6% in 2020: Report

Kolkata: The fast-moving consumer goods (FMCG) sector registered a 2.6 percent growth during the January-March quarter in the eastern region which was under “maximum stress” in the period as compared to other zones, according to a data analytics company report.

The sector grew by 6.3 percent during the first three months of the current calendar year in the country, registering the lowest first-quarter growth in the past three years and also lower than Nielsen’s estimated forecast of 8-9 percent, as the coronavirus pandemic dampened growth prospects. The market research firm said in a report and  growth was impacted in March with the initial effect of COVID-19 outbreak. The segment grew at 7 percent in the October-December quarter of 2019.

The FMCG sector includes non-durable household goods such as packaged food, beverages, toiletries and other consumables that are sold at a relatively low cost. The slowdown was steeper in the urban markets compared to the rural markets, across the four zones, the report said.

“The slowdown in Q120 (January-March) was led by traditional trade channels while modern trade channel accelerated growth,” it said. The growth in the eastern zone during the period was the lowest while South India witnessed an expansion of 8.8 percent, the highest among four regions.

However, a closer look shows that the eastern region’s growth was led by value while the southern states saw a sharp volume expansion, according to the report.

In the east, the value growth was at 2.2 percent in the first quarter of the current calendar year, while the Southern region showed a volume expansion of 6.4 percent. The growth for the FMCG sector in north and west was 4.7 percent and 5 percent respectively.

“Among the four zones of India, the east zone was under maximum stress in Q120 while the south zone continued to sustain growth. North and west zones stabilised after slowdown in previous quarters,” the report said.

There were “distinct signs of recovery in January and February”, which were considered as a pre-COVID period for the India market, according to the analysis.

“The industry clocked a growth of 7.5 percent in January and February 20 (Pre-COVID). This growth was significantly impacted in March 2020 with the initial effect of COVID-19 bringing it down to 4 percent,” it said. This led to a slowdown in overall growth for the quarter, the report said.

Given the significant headwind built in the start of COVID-19 pandemic in 20 March, Nielsen revised the full year industry growth forecast for 2020 to 5-6 percent.