India's consumer goods growth slows as rural demand cools; higher raw material costs hurt small manufacturers: Nielsen

Growth in the consumer goods sector in rural India, where over two-thirds of Indians live, was slowing at twice the rate of urban areas in the previous few quarters.

Reuters July 18, 2019 19:01:42 IST
India's consumer goods growth slows as rural demand cools; higher raw material costs hurt small manufacturers: Nielsen
  • Volume growth in India’s fast-moving consumer goods sector slowed to 6.2% in the three months to June

  • In Jan-March, India’s economy grew at its slowest pace in more than four years, while retail inflation hit an eight-month high in June

  • India’s biggest FMCG companies also posted disappointing results in the March quarter

Bengaluru: India’s consumer goods industry is losing steam as spending in the country’s rural heartland cools and small manufacturers lose competitive advantages in a slowing economy, market research firm Nielsen said on Thursday.

Volume growth in India’s fast-moving consumer goods (FMCG) sector slowed to 6.2 percent in the three months to June from 9.9 percent in the previous quarter, Nielsen said, citing internal data from retail research.

“The sentiments echo those in India’s economic environment, with the Gross Domestic Product (GDP) moving down,” the report said.

Indias consumer goods growth slows as rural demand cools higher raw material costs hurt small manufacturers Nielsen

Representational image. Reuters

In Jan-March, India’s economy grew at its slowest pace in more than four years, while retail inflation hit an eight-month high in June on higher food prices.

Growth in the consumer goods sector in rural India, where over two-thirds of Indians live, was slowing at twice the rate of urban areas in the previous few quarters, Nielsen said.

Higher raw material costs and slowing demand in the foods sector have hurt small manufacturers, the report added.

India’s biggest FMCG companies also posted disappointing results in the March quarter. Hindustan Unilever Ltd, which owns brands such as Dove, Surf excel and Lakme, reported a smaller-than-expected rise in profit, while rival Dabur India Ltd posted a fall in profit.

Nielsen also cut its forecast for FMCG growth for the first half of 2019 to 12 percent against their earlier prediction of 13-14 percent.

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