India's FMCG Sector Expected To See Flat Growth In 2020: Nielsen

Market researcher Nielsen has lowered its growth forecast for the FMCG (fast moving consumer goods) sector in India as it said that COVID-19 induced lockdown in the April-June period battered demand and severely hit trade channels. Its recent forecast suggests that the sector will grow at 1 percent to -1 percent for the full year 2020 when compared to the earlier expectation of a 5-6 percent growth.

In the April-June period (Q2), the FMCG sector's value growth declined by about 17 percent, due to the strict lockdown imposed to curb the spread of COVID-19 adversely impacted supply chain and consumer demand, it said.

Nielsen expects growth to revive in the second half of 2020 driven by festival season demand and other factors like how India tackles the pandemic and monsoon.

"We expect to see some recovery in the July-December period. We are expecting to see some growth in Q3 but we expect to see even better growth in Q4 due to the festival season," it said.

In June, the FMCG sector saw value growth of about 4.5 percent as the country began unlocking economic activity. Interestingly, Nielsen said that this growth was fuelled by a recovery in rural demand and added that growth in rural markets outpaced urban markets.

Rural markets, that account for 36 percent of FMCG sales in India, saw three times the growth seen in the whole country, researchers at Nielsen said.