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Tuesday, October 20, 2020

FMCG industry witnessing signs of recovery to pre-pandemic levels: Nielsen

Two in three consumers said they intend to buy more local brands moving forward

After recording a decline of 8% in value growth in the January-May period compared to the previous year, the FMCG industry is witnessing signs of a rebound to nearly pre-Covid levels, according to markets insights firm Nielsen. This was aided by an uptick in demand in rural India, recovery witnessed by the traditional trade channels as well as consumers increasing spending on non-food categories.

Prasun Basu, South Asia Zone President, Nielsen Global Connect said, “After a significant impact during the lockdown, the FMCG industry in India has recovered sharply in June and is almost back to pre-Covid levels. This recovery is driven by the traditional trade channel. Also, net growth in rural demand and non-food categories is a big plus.” However, compared to other Asian markets such as China, Indonesia, the Philippines and Vietnam, the Indian FMCG industry’s growth recovery has been slower.

Nielsen assessed the data by factoring in the average monthly FMCG value sales in December-February as a baseline of 100, and indexed subsequent months with this baseline. So, while FMCG value sales (indexed to 100) was 101 in March, in May it fell to 75 but in June it was almost back to pre-Covid levels at 98.

During the lockdown phase, consumers had reduced spending on the cosmetics and beauty categories but in June categories such as deodorants, hair colour and skin care products witnessed a sharp recovery. Meanwhile, daily-use item categories such as toothpastes, shampoos, hair oils, washing powders and detergent cakes, which had witnessed rationalisation in consumer spends in the lockdown phase, bounced back in June, Nielsen stated. Rising in-home consumption and cooking at home also ensured that staples such as packaged atta and refined oils continued to see strong demand in June.

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A Nielsen online survey, conducted across 22 cities with 1,725 respondents (19-25 June), revealed that consumers in urban centres continue to be cautious and prefer home delivery over physical visits to stores. This shopping behaviour is being aided by e-commerce platforms, online ordering options available with modern trade outlets, phone or WhatsApp based systems offered by kirana stores and food aggregators’ delivery arms collaborating for department stores and consumer brands. Nearly 62% respondents said they intend to increase online shopping by more than 20%, the survey stated.

Two in three consumers said they intend to buy more local brands moving forward, indicating ‘vocal for local’ is a growing sentiment. While 78% respondents perceive a local brand to be one that is manufactured in India, 50% of the respondents said such a brand creates job opportunities in the country. Around 49% defined a local brand as one that is available across India, 48% said it’s a brand that is headquartered in India and 43% of the respondents perceived a brand that uses Ayurveda or natural ingredients as a local brand.

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