India’s FMCG Sector To Return To Double-Digit Growth This Year, Says Nielsen

India’s fast-moving consumer goods industry will return to double-digit growth in 2022, according to Nielsen, driven by the festive season, consumer confidence and an expected recovery in rural demand.

The market research firm estimates the FMCG sector’s value growth—a combination of volume and price-led expansion—at 8-10% for the full year despite inflationary pressures.

“The first half of the year had an 8% value growth, which indicates an overall positive outlook for January-December 2022. As we have seen historically, the second half of the year will be driven by the festive season, and normal monsoons that will give the necessary push to consumption patterns for the sector,” said Rajesh S Shirali, data science market and client engagement lead at NielsenIQ India.

Consumption Recovery Supports Forecast

The FMCG sector grew at 10.9% in the April-June quarter against 6% value growth in the three months to March.

Volumes continued to fall sequentially, albeit at a slower pace, on account of a drop in average pack size growth. Volumes fell 0.7% in Q2 CY22 compared with a decline of 4.1% in Q1, according to NielsenIQ data.

Unit growth—the extra number of units of a product sold over a given period of time compared to the same period a year ago—came at 8.9% in the quarter ended June against 1.5% in the previous three months, indicating that consumers are buying smaller packs but more units.