India’s FMCG sector may grow 12-13% over July-December

India’s fast-moving consumer goods industry is expected to grow at 12-13 percent in the July to December period, according to Nielsen India.

The rationale behind a double-digit growth forecast is strength in the GDP, a boost in rural income, the uptrend in private consumption and an increase in consumer confidence.

The research agency said the FMCG  industry grew at 11 percent in value terms in the April-June quarter on the back of better consumer off-take, rate cuts due to the implementation of GST (Goods and Services Tax) and also a low base. 

According to Nielsen India, in volume terms, the industry grew at 8 percent.

The research agency pointed out that during the April- June quarter retail stocks jumped to levels higher than the pre-demonetisation period.

Also, modern trade channels have witnessed a bounce- back and the sector saw 10 percent of sale come from this channel. 

This is the first time that modern trade contribution has entered into double-digits, Sameer Shukla, Executive Director at Nielsen India said. 

The company witnessed stress in rural FMCG consumption around demonetisation and before the rollout of GST. As a result, growth in rural markets came down to be at par with urban growth in the months following demonetisation.

In the personal care space, the natural trend continues to gain traction and is growing three times the pace compared to the non-natural segment. 

However, the foods category witnessed growth higher than personal care and home care due to consumers opting for branded foods over unbranded. The main reason for it being that price gap between branded and unbranded has narrowed considerably post the implementation of GST.

An analysis of the fastest growing FMCG manufacturers in India suggests that domestic companies performed better than the MNCs in recent years.