Indian consumer goods sector slows; rural shows recovery signs - NielsenIQ

Varun Beverages

06/02/2024 06:55

CHENNAI, Feb 6 (Reuters) - Sales volume growth in the
Indian consumer goods sector in the October-December quarter
slowed sequentially amid soft sales at mom-and-pop stores,
market researcher NielsenIQ said on Tuesday, even as rural
regions bridged the gap with thriving urban areas.
    Consumer goods makers, over the last few quarters, grappled
with subdued sales in the hinterlands as people cut back
spending on both essentials and discretionary items amid price
pressures. 
    Sales volume in the sector increased 6.4% in the fourth
quarter of calendar year 2023, slower than the 8.6% growth in
the previous quarter, NielsenIQ said, as growth at smaller
stores fell short of large supermarkets.
    However, there was an uptick in rural demand.
    "For the first time in 2023, consumption gaps between urban
and rural markets are narrowing," said Roosevelt D'souza, head
of customer success at NielsenIQ in India.
    Sales volume in rural areas climbed 5.8% in the December
quarter, compared with a 6.8% growth in urban regions, according
to NielsenIQ. In the previous three quarters, urban consumption
had outgrown rural by 3.8 to 6.2 percentage points.
    In rural India, "habit-forming categories", such as biscuits
and noodles, thrived as product prices slipped 0.4% across the
country, marking the first decline in more than two years,
NielsenIQ said.
    Packaged food manufacturers, including Saffola cooking
oil-maker Marico  MRCO.NS  and Good Day biscuits-maker Britannia
Industries  BRIT.NS , have cut prices on the back of easing
commodity prices to better compete with smaller rivals.
    Consumer goods majors Hindustan Unilever  HLL.NS , Pepsi
India bottler Varun Beverages  VARB.NS  and Adani Wilmar
 ADAW.NS  and ITC  ITC.NS  have so far reported mixed results
for the December quarter. Meanwhile, Dabur India  DABU.NS  said
growth in rural areas outpaced urban pockets.
    NielsenIQ expects the consumer goods sector to grow 4.5% to
6.5% in 2024, with the government's measures to support the
rural economy boding well for companies that have a significant
presence in rural areas.

 (Reporting by Praveen Paramasivam in Chennai; Editing by Eileen
Soreng)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))