APN News

  • Saturday, April, 2019| Today's Market | Current Time: 06:16:03
  • Nielsen FMCG Q2 (Apr – Jun 2019) outlook stands at 12-13%.

    Published on April 17, 2019

    Mumbai The FMCG Industry has kickstarted 2019 with another double digit value growth of 13.6% in Q1’19 , in sync with the forecast in the last quarter. This is at a slightly lower note than the last quarter of 2018 calendar year (-2.3% from the previous quarter). Similar sentiments are witnessed in the economy with a 6.6% GDP growth in the December quarter of 2018 against an expected 6.8%. Inflationary pressure is mounting in recent months from 2% in Jan’19 to 2.9% in March’19 The FMCG Industry continues to be driven by volume growth which is at 9.4% in Q1’19 contributing 69% to the overall value growth.

    Commenting on the report, Sunil Khiani, Head Retail Measurement Services, Nielsen South Asia said “While slight drop is witnessed in urban growths, there is a significant softening of growth trends in rural which is dampening the overall FMCG industry growth from Q3’18 to Q1’19. Historically, rural has grown 3-5% points faster than urban and the recent slowdown in rural growth also brings the growth closer to the urban growth.”

    Further commenting on the outlook, Sunil added “the overall drop witnessed in rural growth is majorly driven by slow down in packaged food category. We see significant growth slow down among small players as compared to large manufacturers. The magnitude of the slowdown for small players is even greater in rural.”

    FMCG INDUSTRY TRENDS

     Macro-Economic Factors: Inflation is expected to inch up closer to the 4% mark (2X) as the year progresses from a low of 2.1% reported in Dec 2018. GDP hit a 6.6% in Q4 2018 and the forecast for Q1 2019 is expected to be in the ~6.4% range. The full year is expected to be stable and end at ~7.2% range similar to how FY 2018 panned out (7.1%). Having said that, these metrics are still conducive and buoyant as compared to the rest of the world.

    Rural Consumption Story: Rural consumption this year is healthy but softening. While there is a significant rural impetus in terms of various government schemes, disbursement of MNREGA, Minimum supplier price being raised for crops and including expected populist measures, surging non-farm income, rainfall could play the spoilsport! Forecasts of a below normal monsoon this year at 93% as against a normal range of 96-104% is another key area to watch out for.

    The Low Base Effect: The high base especially in Q3 and Q4 of 2018 to the tune of ~16% will have an impact on the Q3 and Q4 forecast for 2019 and we expect to be in the high single digit range.

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