FMCGs to see double-digit growth this year

The growth is aided by a mix of volume and price-led expansion and the rebound of some consumption

August 4, 2022

The sector’s value is expected to grow at 8-10% this year

The first half of the year has as seen an 8% growth in the sector’s value

The sector grew at 10.9% in the April-June quarter

Consumption revival seen during the quarter is led by an increase in unit growth, which reached 8.9% this quarter

According to market research firm Nielsen’s projections, the FMCG industry will witness double-digit growth in 2022, aided by a mix of volume and price-led expansion and the revival of some consumption. The firm also stated that the sector’s value is expected to grow at 8-10% this year.

Forecasts and figures

Experts are expecting a positive overall outlook for the sector in 2022, after mentioning that the first half of the year has seen an 8% growth in the sector’s value. The second half is expected to be driven by normal monsoon and the festive season, which will collectively enable a necessary push for consumption patterns.

The sector grew at 10.9% in the April-June quarter (Q2), compared to the previous quarter’s 6% growth. The growth was mainly led by increased prices of FMCGs, which accounted for 11.6% of the growth figure.

Volume-led growth has also improved in Q2,  from –4.1% in January-March quarter to –0.7% in April-June, indicating a revival in consumption and highlighting the cautious optimism among consumers.

Consumption revival seen during the quarter is led by an increase in unit growth, which increased to 8.9% this quarter, from the previous quarter’s 1.5%. The statement further added that consumers are buying smaller packs, but in more units. 

Leading categories

Revival in consumption was seen mostly in the food category, which witnessed a growth of 1.8% in April-June with products such as chocolates and salty snacks growing by 15.1%.

The growth in the FMCG sector was followed by a revival in the non-essential category, with personal care products like perfumed deodorants & cologne, skin creams, coconut oil, hair dyes, and talcum powder. While the overall non-foods category is in negative figures, it has improved in Q2 with an uptick from -9.6% in Q1 (January-March) to -6.4% in Q2.

Urban markets in the same period have revived by witnessing a volume growth of 0.6%. Rural markets on the other hand, are undergoing a slower recovery. 

Small manufacturers were positively affected by the consumption revival, and have experienced a volume growth of 1.8% in Q2 of this year, compared to –8.5% in the previous quarter. Their growth was primarily supported by an increase in sales of units from the food category. 

Experts said that the recovery of consumption and contributing macro factors support the statement’s forecast of this year’s double-digit growth for the FMCG sector.