Consumer Goods Demand Back At Near Pre-Covid Levels In June: Nielsen India

People trying new recipes at home during the lockdown drove demand for packaged wheat flour and edible oil, Nielsen India says.

A supermarket in Delhi. The slowdown in FMCG, according to Nielsen, is largely driven by north and west India. (Photographer: Dhiraj Singh/Bloomberg)
A supermarket in Delhi. The slowdown in FMCG, according to Nielsen, is largely driven by north and west India. (Photographer: Dhiraj Singh/Bloomberg)

Demand for India’s consumer goods makers recovered to near pre-covid levels in June as sales of products such as deodorants, hair colours, skin care and other personal items picked up after the nation eased isolation curbs, according to Nielsen India.

“Categories like toothpaste, shampoos, hair oils that had witnessed rationalisation in the lockdown period bounced back in June," Nielsen India said in its report. "A similar trend was witnessed for home care products like washing powder and detergent cakes.”

As the lockdown was only partially lifted and cases of infection continued to mount, consumers preferred to stay at home, trying new recipes that drove the demand for packaged atta (wheat flour) and retail packs of edible oils during the month, the market researcher said. Sales of hygiene products and immunity boosters such as liquid toilet soaps, chyawanprash and honey, too, remained elevated in June.

India’s consumer goods makers were battling the worst consumption slowdown in more than a decade even before the pandemic struck. The lockdown, effective March 25, froze economic activity barring essential services, and capped consumption, before the government started easing restrictions from May. That pushed the economy toward its first annual contraction in more than four decades.

The demand for branded consumer goods was robust in rural India. A rise in minimum support price for crops, good rabi crop and the government’s increased support to rural India have caused consumption to be higher in these areas, Sameer Shukla, west market leader, South Asia at Nielsen Global Connect, told BloombergQuint. Also, due to fewer cases in rural India than large cities, it was easier for people to move around, Shukla said.

Rural India contributes 35% to the entire fast-moving consumer goods basket.

Shukla’s view corroborates the trend highlighted by the distributors—who according to Nielsen India contribute 90% to the factory-gate sales of the Rs 4-lakh-crore FMCG industry. Due to the sowing of the kharif crop, a lot of workers found employment in fields, increasing the rural spending power during these months, a distributor told BloombergQuint over the phone. This was boosted by cash transfer, rural employment schemes and free grain provided by the government in its limited relief packages.

Shift In Consumer Behaviour

Nielsen India said “months of restricted living has led to semi-permanent behaviour shifts among consumers. While India is in the transitioning phase, consumers are monitoring the situation and will be cautious in all aspects of life”.

  • Shrinking household incomes are leading to reallocation of consumer spending.
  • Health and hygiene have become an integral part of consumer lifestyle. They plan to follow precautionary measures for the foreseeable future.
  • Consumers prefer home delivery and fewer shopping trips both online and offline.
  • There is a rising sentiment towards local with increasing support for Atmanirbhar Bharat and ayurveda.

Still, Nielsen India has not changed it forecast for the year. In April, the researcher cut its growth forecast for the FMCG sector, including e-commerce, to 5-6% for the year from 9-10% earlier.