Market researcher Nielsen now tasks India’s packaged shopper items gross sales to shrink or stay little-changed from final yr, slashing its 5-6% development estimate made on April 30 on optimism that the sector would higher face up to the fallout from the Covid-19 pandemic.
The fast-moving shopper items (FMCG) sector, thought of comparatively resistant to financial recessions, in India is now anticipated to shrink 1% within the worst-case situation, Nielsen mentioned on Thursday. At finest, it can develop 1% in 2020 because the Covid-19 lockdown has crimped demand and severely disrupted commerce channels.
Nielsen expects the festive season to spice up demand and assist FMCG corporations report development within the December quarter. However the outlook for these corporations stays dim as widespread unemployment and a depressed financial system might weaken shopper demand, it added.
“The bellwether FMCG trade, which was making an attempt to revive from a troublesome 2019, had a major hit within the April-June quarter, with a 17% decline in gross sales worth as in comparison with the identical quarter of 2019,” Nielsen mentioned in its FMCG Q2 report on Thursday.
“Extreme and prolonged lockdowns, restrictions on manufacturing items and motion of individuals and items, social distancing norms and retailer closures, amongst others, have had a major influence on the Indian FMCG trade, a lot in order that trade development went to a unfavorable zone within the first half of 2020 (6% decline in January-June interval),” it added.
Nevertheless, some early inexperienced shoots had been seen in June when India eased lockdown restrictions. FMCG gross sales registered 4.5% year-on-year worth development in June, suggesting that buyers stepped out to purchase extra items.
Nielsen mentioned an enchancment in demand may also hinge on how India tackles the surge in Covid-19 instances. “We predict some development within the third quarter, however we predict sooner development within the fourth quarter because the festive season will fall extra within the December quarter. I wouldn’t be stunned if the third quarter delivered related development to that seen in June,” mentioned Prasun Basu, South Asia zone president, Nielsen International Join.
Within the quarter to June, development in rural markets and small cities outpaced that of metros. In June, rural markets, which account for 36% of worth gross sales of FMCG, grew 3 times sooner than the pan-India development, Nielsen mentioned.
The pandemic was extreme in Indian metros and concrete centres, in contrast with rural areas. Trade gross sales continued to say no in greater cities in June, Nielsen mentioned. Whereas all-India development in June was pegged at 4.5%, rural markets noticed worth development of 12.5%.
Basu mentioned rural will proceed to outperform massive cities pushed by a number of elements, together with authorities welfare schemes, fewer constructive instances and a comparatively properly unfold out monsoon, which bodes properly for the agrarian financial system.