New Delhi: India’s fast moving consumer goods sector may at best remain flat in 2020 as covid-induced lockdown in the second quarter of the year battered demand and severely hit trade channels, market researcher Nielsen told reporters on Thursday.
Nielsen expects the fourth quarter of the year to deliver better growth driven by festival season demand and depending on how India moves to tackle the surge in cases and effectively lifts further restrictions in the market.
This is Nielsen’s second revision of its annual growth forecast for the sector that has seen a surge in demand for categories such as as packaged wheat, biscuits, and soaps as India stayed at home and spent more on essentials.
Earlier this year, the researcher predicted a 9-10% growth for the sector that was already struggling to grow sales in rural markets.
In April, it further revised its forecast for the year slashing it to 5-6% factoring in the economic fallout from the pandemic.
However, the researcher has further downgraded the growth forecast for the full year.
Nielsen maintained that April and May dragged growth rates for the sector, with June seeing some signs of recovery. June registered 4.5% year-on-year value growth, while April and May fell 27%.
Interestingly in the second quarter, growth in rural and small towns outpaced that in metros.
In June, rural markets, that account for 36% of FMCG sales in India, grew three times of all India FMCG growth, researchers at Nielsen said.
“We are expecting some growth in Q3, but we are expecting more growth in Q4 than Q3, as festive time will be more in swing in Q4. I wouldn’t be surprised if Q3 delivered similar growth to the June growth,” Prasun Basu, South Asia Zone president, Nielsen Global Connect, said.