Bharat trumps India in FMCG demand in first three months of 2021

Photo by Oleg Magni from Pexels

Ashish Kulshrestha | The Clear Picture

The Indian Fast Moving Consumer Goods industry is witnessing growth from unexpected corners in the pandemic year, proving cushion to an otherwise subdued business. Companies including Godrej Consumer Products, Indian Tobacco Company (ITC), Hindustan Unilever and Nestle among others are registering brisk business in rural markets due to relatively lower impact of the virus, resulting in lesser disruptions.

According to FMCG Snapshot for Q1 2021 released by NielsenIQ's Retail Intelligence team, the rural market(s) continued to perform with strong growth of 14.6% in the Mar quarter after a 14.2% per cent growth it posted in the December quarter. For Godrej Consumer Products, the growth in rural markets outpaced urban markets by 1.4x in Q4FY21 while at the same time, ITC, Unilever and Nestle saw strong demand from rural consumers. Nielsen expects a good monsoon this season, making it the third consecutive year of rural rejoice. This had a boost up effect on the earnings of agrarian households and kept rural sentiments upbeat.

He added, “I think if the second wave does not spread deep into rural, then the rural consumption story with the resurgence for reasons that we know have been strong should continue this year also”.

A report by Elara Global Research states that Nestle too is upbeat on the rural market to drive demand and is aiming for more rural-focused launches for the next stage of rural growth. Rural sales comprises only 25% of total sales as on CY20 for Nestle and currently only 30-40% of all SKU in the portfolio have rural presence.

It has significantly expanded its reach in rural markets by almost tripling its wholesale hubs in and reaching out to nearly 89,000 villages in CY20 from a mere about 6,400 in CY16. For HUL as well, from a channel perspective, E-commerce, General Trade and Rural will continue to be key priorities for the company.