Shoppers' grocery purchases return to growth aisle after five quarters of fall - The Economic Times

Purchases of daily groceries and essentials rose 2.4% in the October-December period, halting a five-quarter run of declines in the fast-moving consumer goods (FMCG) segment. The quantity of FMCG goods bought, or volumes, went up 1.3%in rural markets and 3.6% in cities from a year earlier, when both had fallen, according to data from Kantar Worldpanel, a global consumer research firm owned by communications and advertising giant WPP.

The pace is lower than in the December quarter of 2020 when urban volumes rose 4.4% and rural expanded 6.6%, indicating only a partial revival. "We are seeing early signs of recovery in rural markets," said Neeraj Khatri, chief executive, Wipro Consumer Care, India and Saarc.

Growth to be price-led: FMCG cos
"Recovery is better in the south and west markets and started in the October-December quarter, but we have to wait for the March quarter to understand if it sustains."
Kantar tracks household consumption and also has a higher number of items from the unorganised end of the business, unlike NielsenIQ and companies' earnings data that take into account sales to retailers and distributors.
"The data indicates to us that there is a turnaround happening," said K Ramakrishnan, South Asia managing director of Kantar. "Urban is poised for a turnaround barring any rude shocks at the macro level. There are expectations of a bumper wheat harvest in 2023, and as such even rural could see better growth rates than what it was seeing till now."

However, NOAA, the US government's weather agency, has indicated the possibility of an El Nino year.

In the December quarter, growth in the broader FMCG market was across categories, with personal care expanding 4.8% and food and beverage (F&B) growing 2.5% despite a slowdown in atta.

"If you look at the last six months, every month there was a sort of a sequential decline, which has now gotten arrested. We are coming out of that worst high level of inflation," Marico managing director Saugata Gupta said on an investor call on February 3. "I am not saying it's going to be a hockey stick recovery but a gradual one. But the worst of commodity inflation and volatility is over."

A few key commodities such as palm oil have softened as year-on-year inflation is moderating gradually from the peak, but prices of some items such as milk, barley and soda ash have gone up again. As a result, companies saw people downtrading to lower-priced products, a trend that could taper off now. Most firms also said growth will continue to be price-led as volumes are likely to remain under pressure.

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Shoppers' grocery purchases return to growth aisle after five quarters of fall - The Economic Times
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