India's rural consumer goods consumption back to growth in Q1 -NielsenIQ

Procter & Gamble Hygiene and Health Care

10/05/2023 13:27

CHENNAI, May 10 (Reuters) - The consumption of consumer
goods in rural India returned to growth after more than a year
in the March quarter and is expected to grow for the rest of the
year, market analytics firm NielsenIQ said, as inflation and
price hikes eased.
    The increase in product prices slowed to 6.9% from January
to March, from 7.9% in the previous quarter, helping consumption
in rural India increase 0.3%, after six quarters of decline,
NielsenIQ said in a report on Wednesday.
    Several Indian consumer goods makers, including Parachute
hair oil manufacturer Marico  MRCO.NS , Fortune cooking oil
seller Adani Wilmar  ADAW.NS  and Dove soapmaker Hindustan
Unilever  HLL.NS  have cut prices as commodity costs come off
their highs.
    "More than 2/3rd of India's population resides in rural
areas," NielsenIQ Managing Director Satish Pillai said. "The
upward trends seen in rural markets is particularly encouraging,
and may be the turning point for the industry."
    However, NielsenIQ said consumers have not fully returned to
buying bigger packs, as consumers living paycheck to paycheck
are increasingly buying smaller packs of consumer goods to save
cash.
    Consumption in urban areas was steady, rising 5.3% in the
first three months of the year, bringing the overall volume
growth to 3.1% for the period.
    That, along with the price hikes and a demand rebound in
mom-and-pop stores, helped boost the overall value of sales by
10.2% in the first quarter.
    NielsenIQ expects the value of sales to rise 7%-9% for the
whole of 2023, higher than the 8.4% increase in 2022, benefiting
from likely timely monsoon as well as the central bank's
expectations for the Indian economy to expand.
    Consumer goods makers have, so far, reported mixed earnings
for the March quarter: toothpaste maker Dabur India  DABU.NS 
posted shrinking margins, while Pepsi-bottler Varun Beverages
 VARB.NS  recorded profit growth.
    Meanwhile, a Reuters poll of economists found India's
consumer inflation likely cooled to an 18-month low in April as
fuel prices moderated, potentially setting up consumer goods
makers for sales gains in the April-June quarter.

 (Reporting by Praveen Paramasivam in Chennai; Editing by Savio
D'Souza)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))