Indian FMCG Industry Witnesses 6.5% Growth in Q1 2024; Rural Consumption Surpasses Urban

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The Indian Fast-Moving Consumer Goods (FMCG) sector experienced significant growth in the first quarter of 2024, with rural consumption outpacing urban for the first time in five quarters.

According to consumer intelligence firm NielsenIQ (NIQ), the industry saw a 6.5% growth in volume terms nationwide during the January-March period of 2024.

Growth Trends in FMCG Sector

The 6.5% growth in volume terms at a national level marks a substantial increase from the 3.1% recorded in Q1 2023, according to NielsenIQ.

Both food and non-food sectors contributed to the growth in consumption in Q1 2024. However, non-food sectors saw almost double the growth compared to food, with a 6.6 % increase in value attributed to a 6.5 % increase in volume.

Factors Driving Growth

According to Roosevelt Dsouza, Head of Customer Success India at NIQ, home and personal care (HPC) categories outperformed food categories.

The quarterly snapshot revealed that in the first quarter of 2024, volume growth in the food sector was 4.8%, down from 5.3% in Q4 2023, while non-food categories experienced a growth of 11.1%, compared to 9.6% in the previous quarter.

Consumption Patterns across Trade Channels

In urban areas, there was a sequential decline in consumer demand, leading to a 5.7% growth in Q1 2024. Conversely, rural consumption growth picked up pace, surpassing urban growth.

Modern trade exhibited strong double-digit volume growth at 14.7%, while traditional trade experienced stable growth, with volumes registering 5.6% growth in Q1 2024, compared to 5.3% in Q4 2023.

Sector-wise Analysis

Within the retail sector, more units were purchased in food categories compared to the same period last year, while non-food categories saw an increase in the purchase of larger pack sizes.

Consumption in personal care and home care categories drove growth in the non-food sector, with personal care growing at 8.4% in Q1 2024, compared to 5.8% in Q4 2023.

Performance of Large vs. Small Players

While large players in the FMCG industry continued to demonstrate strong performance, smaller manufacturers showed higher volume growth rates in non-food categories over the last two quarters. This trend may be attributed to challenges faced by smaller players in stabilizing prices in the food sector.

The first quarter of 2024 witnessed dynamic shifts in the Indian FMCG landscape, with rural consumption emerging as a significant driver of growth.

As consumer preferences evolve and market dynamics continue to change, stakeholders in the industry will need to adapt swiftly to capitalize on emerging opportunities.