FMCG growth in India hits record levels

Inflation in India drops to a two-year low and FMCG breaks new records, but shoppers are still feeling the pinch and turn to promotions to squeeze more from their grocery budgets.
12 July 2023
India FMCG pulse Q1 IMAGE
Ramki Kasthuri
K. Ramakrishnan

Managing Director, Worldpanel Division, South Asia

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Worldpanel’s latest FMCG pulse reveals that FMCG grew by 6% between February and April. The 8% growth in urban areas set a record, and while 4.2% growth in rural did not but remains strong.

Part of the slowdown of the past years was always attributed to the drop in Atta (flour) purchases due to Government’s subsidy scheme for food grains. Since this ended in December 2022, Indian consumers have begun shopping in the Atta category once again, which has driven 19% and 37% growth in March and April, respectively. Removing the effect of Atta, quarterly growth is 1.6%, which is better than previous periods, but it will take some time before it fully recovers to the Atta pre-subsidy levels.

FMCG spend continues to rise

Households spent an average of 17,792 Indian rupees on FMCG during the past year and the sector is still growing at 8%

If growth continues at the same rate, we expect FMCG household spend to reach Rs. 20,000 by the end of 2025. The growth of non-staple foods is breathtaking. The volume purchased across these categories from February to April 2023 was up 51% more than in the same period in 2019.

Inflation drops, but shoppers still feel the effects

India’s retail inflation dropped to 4.25% - the lowest level in two years. But this has brought no relief for shoppers. FMCG spend didn’t slow and the three months from February to April 23 hit 13% - the highest growth since the pandemic. This stellar growth is due to a general increase in spend across many categories, which has accelerated during the last two quarters.

Before the pandemic there were just two categories in which households spent more than Rs. 1000 per year. Now there are six, due rising prices. Despite inflation easing, shoppers are still feeling the pinch and looking for ways to squeeze more from their grocery budgets. They are cutting back on discretionary purchases, cutting back in other categories, or switching to cheaper brands and promotions for essentials.

Promotions remain prevalent

Almost every household in India (97%) bought at least one promotion over the last year. And when we talk about promotions, we mean manufacturer-driven promos, not those driven by retailers. Free grammage was the most popular promotion, with 99% of people buying one over the last year – with growth almost doubling since the previous year. Free grammage promos are most commonly seen across personal care and RTE snacks.

Download Worlpanel’s latest FMCG Pulse. As well as our usual data-backed analysis, you’ll find a focus on non-staple foods and a deep-dive into promotions. No matter how big your brand, there is always room to grow. We also look at some interesting stats around FMCG manufacturers, with a focus on how challenging it is to get big.

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