FMCG sales growth in rural areas to outstrip urban markets
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Rural India has bounced back as a buyer of fast-moving consumer goods (FMCG) such as soaps and soft drinks and sales of these goods are expected to expand at a faster pace than urban areas in the second quarter of 2024, according to a report by consulting firm Kantar.
The report states that the rural market is a "bright star,” recording a "resurgence" in 2024 and is expected to further consolidate its position in the April-June quarter of the year.
This growth in the rural areas has been fuelled by region-centric measures announced by the government in the interim budget earlier this year, which provided stability.
Populist measures expected by some states which are going to face elections this year are also expected to drive up rural demand, the report added.
"The start to 2024 from a rural perspective has been brilliant, with rural growth overtaking urban's; and the rural worm is looking upward," according to the Kantar FMCG pulse report for Q2.
The report also states that the urban market did not record growth for three straight quarters, and is contending with a huge Q2 2023 base.
The falling Urban curve coupled with a strong base is likely to constrict the numbers for the next quarters, the report states.
According to Kantar Worldpanel Managing Director – South Asia K Ramakrishnan, for the most part of 2023, Urban has maintained strong growth numbers.
"Rapid growth is unsustainable for the long term, and necessarily Urban is hitting brakes now. This has also coincided with typically Urban-centric categories such as noodles and salty snacks slowing down in growth within Urban, after continuously galloping since the pandemic," he said.
The rural market may also get a boost from the rabi crop but the exact impact of the weather is still not clear, according to the report.
Normally, rural area contributes around 35 to 37 per cent of the FMCG sales.
The report also highlighted that though inflation may have slowed down to acceptable levels, it still has an impact on the consumer.
Ramakrishnan said that the Indian rural market is full of potential and although has dampened the mood of the rural shopper for a time, the trends are now pointing up.
