FMCG Sector’s Rural Sales Outpace Urban Mkt In Q3

New Delhi: Rural markets continue to surge, while metro markets continue to drag the urban volume growth of the FMCG industry, which achieved a 10.6 per cent growth in value terms in the December quarter of 2024, according to a report from data analytics firm NielsenIQ.

Rural areas have surpassed the large urban markets in growth for the fourth consecutive quarter, according to the latest NielsenIQ FMCG Quarterly Snapshot. Helped by festive demand in the October-December period, the FMCG industry largely had a consumption-driven growth, in which the overall volume was up 7.1 per cent despite a 3.3 per cent average price increase due to prevalent inflationary pressures. However, the FMCG industry also has a “higher unit growth than volume growth,” indicating a “preference shift of consumers towards smaller packs in consumption” due to high food inflation. Besides, small/local manufacturers continue to outpace larger FMCG companies in driving consumption, fuelled by consistent volume growth, it said. In Q4 2024, both urban and rural markets reported a sequential recovery in consumer demand due to the festive season. However, the rural market, which is mainly a small sachets-based product market doubled its growth rate from large urban markets.

“Urban consumption growth in Q4 2024 doubled vis-à-vis Q3 2024, while volume rural growth increased to 9.9 per cent from 5.7 per cent in the previous quarter, 2X faster growth than Urban,” the report said adding that “Notably, rural areas continue to surpass urban areas across most regions of India.” In the December quarter, the urban market contributed 62 per cent of the volume, while the rural market contributed the remaining 38 per cent. Moreover, sales volume from the traditional trade channels, which includes local Kirana shops grew by 8.1 per cent in the December quarter of 2024, compared to 3.9 per cent in the corresponding period of 2023. While Modern Trade, which includes supermarkets and hypermarkets - had a degrowth of 1.1 per cent in December. Its growth rate is gradually on decline as it had reported 20.2 per cent growth rate in the March quarter of 2024.