Feeble demand in rural areas of the country has affected sales of fast-moving consumer goods (FMCG) in September as compared to August, which saw heavy stocking ahead of the festival season, according to the data of Bizom, a retail intelligence platform.
Sales in rural India fell 14.3 per cent while urban sales growth stood at 1.1 per cent in September as compared to the previous month.
Overall FMCG sales fell by 9.6 per cent in September as compared to August.
Rural sales form 65-70 per cent of FMCG sales, according to Bizom.
It pointed out rural sales were affected owing to excessive rain in some areas and weak precipitation in others, thereby hitting farm yields and household incomes.
It also said: “Kirana stocking across both urban and rural remains cautious given that the consumer inflation worries haven’t completely eased off and also kirana owners are looking to restock only after liquidation of the stock built up in the previous month (August 2022).”
Among categories, on a month-on-month basis, commodity products (wheat, rice, edible oil, etc) posted the highest decline in sales —14.5 per cent — followed by home care products, which were down 8.6 per cent.
Personal care was an exception with flat sales as compared to the previous month.
Godrej Consumer Products in its quarterly update said the FMCG industry continued to remain soft during the quarter.
The makers of the Cinthol soap said rural markets witnessed slow growth compared to urban areas in the July-September quarter.
Akshay D’Souza, chief of growth and insight at Bizom, said: “Even so, there remains a strong return to normalcy in terms of festivities and many more people are out celebrating festivals this year than they did in the previous two years.
"Going by current trends, measures to bring down inflation will reduce consumption headwinds and improve sentiment during the upcoming festivals.”
On a year-on-year basis, FMCG sales were up 8.1 per cent in September, while for the July-September quarter the increase was 12.3 per cent, according to Bizom’s data.
In August, both rural and urban markets had witnessed growth.
Rural areas grew 6.7 per cent and urban ones 5.5 per cent on a month-on-month basis, which sent overall sales up 6.3 per cent.
“Typically before the festival season, consumers end up splurging in categories that are large-ticket purchases.
"Also, there is an uptick in gifting packs across eatables, which start to pick up, especially at the higher price end.
"This lull in sales is witnessed every year as June, July and August are strong for FMCGs,” B K Rao, senior category head at Parle Products, told Business Standard.
In its quarterly update, on Tuesday Marico said: “In India, demand sentiment trended on similar lines as the preceding quarter during most of the quarter, with some signs of positivity in the last month.”
“With retail inflation holding firm, downtrading in rural (areas) was still prevalent during the quarter.
"Urban and premium discretionary segments continued to fare better.”
Marico said it expected the company’s growth in volumes in India to be in low single digits during the just concluded July-September quarter.