Nielsen expects 3% fall for FMCG, but companies disagree

New Delhi: Market research firm Nielsen expects India’s fast-moving consumer goods (FMCG) sector to decline 3% in 2020, but companies in the sector considered resilient against economic cycles believe otherwise.Nielsen has lowered its earlier forecast of flat growth due to factors such as accelerating inflation and the first-quarter FY21 economic contraction. It had earlier predicted an expansion of 9-10% before the Covid-led lockdown had begun, which was later scaled down to an expansion of 5-6%, and subsequently to flat growth in July.However, companies disagree.“The (Nielsen) forecast is contrary to our expectations; we are seeing a healthy revival,” said Mayank Shah, senior category head at the country’s biggest cookies maker Parle Products, which sells Parle-G, Milano and Hide & Seek brands of cookies. “While there has been some downtrading in spending in urban India, overall the biscuits category is growing in both urban and rural markets and we expect the momentum to continue.”Sales over the web platforms and in rural areas point to a recovery underway.“We have seen a steady recovery in demand sequentially with some channels and geographies, like e-commerce and rural, growing at a fast pace. Although the situation is still fluid, we are hopeful that H2 would be better than H1,” said Lalit Malik, chief financial officer, Dabur India.Arvind Mediratta, MD & CEO, METRO Cash & Carry India, said the FMCG sector continues to exhibit strong growth.“I expect FMCG growth to be in the positive zone. People cannot do without basics like detergents and toiletries,” he added.However, a senior official at a large diversified FMCG company said categories such as deodorants saw a steep decline since consumers stayed indoors and that there is no way to recover that demand. “So we do expect a downgrade,” he added.September Quarter BoostThe downward revision is despite strong recovery in the July- September period compared to the earlier quarter. At an overall level, absolute sales have just touched the pre-Covid level, but growth was still lower compared with a year-ago period.The sector reported 1.6% value growth in the July-September quarter on account of gains from the rural markets and e-commerce channels. The recovery was led by categories such as staples, health and hygiene, Nielsen said.Government stimulus and reverse migration led to a double-digit growth of 10.6% in rural areas in the September quarter. Urban markets, especially, those in the metros also witnessed recovery.The recovery was led by the northern zone of the country where the number of covid cases was less compared to the western region which continues to be under stress, Nielsen added.While e-commerce and traditional trade grew contributing 3.1% and 88.7%, respectively, in terms of value to the FMCG sector, modern trade continued to be impacted contributing 8.2% to the industry in the third quarter.Consumer preferences toward affordable products also continued with premium categories fighting back in the third quarter. The value contribution of premium products in the entire FMCG basket declined one percentage point to 22.9 percent in the third quarter compared to Jan-March period. 79434805

from Economic Times https://ift.tt/37e74lc