Market research firm Nielsen on Thursday slashed the 2020 growth outlook for the fast-moving consumer goods (FMCG) sector to 5-6% from the earlier projections of 9-10%. This drop was attributed to the impact of the COVID-19 pandemic.
It said that in the first quarter of 2020, the FMCG industry grew at 6.3% (across verticals such as traditional trade, modern trade and e-commerce) down from 7% in the previous quarter, indicating continued growth slowdown and longer than expected recovery time for the industry. In March, volumes grew a mere 0.5%, while the sector clocked a value growth of 4%.
Nielsen, which considers calendar year for calculating growth, estimated FMCG industry to grow between 8-9% in the first quarter of 2020.
However, the expectation of having a conventionally big March month hit a roadblock with the pandemic.
The firm has also said that the intensity, severity and longevity of the nationwide lockdown will have major implications on multiple industries.
According to the report, sectors such as auto, that was already dealing with a slowdown, retail, tourism and travel industries have faced the brunt of the slowdown.
Another interesting insight from the report is that across zones, the slowdown in Q1’20 was led by traditional trade channels while the modern trade channel saw accelerated growth.
The slowdown was steeper in the urban markets compared to the rural markets.
“This trend gets corroborated from the fact that the unemployment rate in Q1’20 reached a new high in the last 14 quarters, more prominent in North and Eastern zones,” the report said.
“The initial recovery was driven by Food categories. In March, there was a significant slowdown across FMCG categories, more pronounced in Non-Food categories. The Large manufacturers, classified as those with an annual turnover greater than Rs 600 crores, continued to witness volume growth in March 2020 and are being resilient in the environment,” said Sharang Pant, Lead Retail Vertical and RMS, Nielsen Global Connect.
Among the four zones of India, East zone was under maximum stress in Q1’20 while the South zone continued to sustain growth. North and West zones stabilised after a slowdown in previous quarters.