FMCG brands face rural slowdown as sales volume dips

Bengaluru, 4 June FMCG brands are beginning to see the impact of slowdown in consumption, especially in rural areas, with brands adjusting their strategies to cope with the changing dynamics.

Most FMCG products have seen increase in prices as manufacturers passed on the increase in input cost, oil prices and other expenses to customers.

According to a Nielsen report, rural consumption has dipped more than five per cent in January- March period owing to increase in prices of refined and non-refined edible oil, vanaspati, packaged wheat flour among others.

During the January- March period, sales volumes dipped by four per cent, making it the lowest in the last three quarters.

Meanwhile, the volume degrowth was significant in non-food categories as consumers tightened their purse strings to manage with the price rise. More consumers are opting for smaller packets of essential and discretionary items than they used to before the price hike.

Not only established FMCG players, but also ever burgeoning D2C (direct to consumer) brands are also facing demand slowdown in recent months.

After opening up markets as COVID cases recede, many people are opting to buy products from offline shops than purchasing those from online channels. This has led to reduction in rate of growth of online sales channels in the past few months.

To overcome slowing sales growth, many D2C brands are opening up physical outlets to sell their products. Such omnichannel approach is likely to help these new age brands to survive the changing needs of the market.

Experts said that with hopes of a good monsoon and steps taken up by the government to reduce inflation, some respite in price hike is likely in coming months.

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