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Fast Moving Consumer Goods (FMCG) Sector
Why is it in the news?
As per a report, the fast moving consumer goods (FMCG) segment is expected to see a lower growth this year compared with 2018 on account of a slowdown in both rural and urban demand.
More in the news
- According to Nielsen, a global market research firm, the current year is expected to see the FMCG sector grow at 11-12% or about 200 basis points (bps) lower than that of 2018.
Findings of the report:
- While a slight drop was witnessed in urban growth, there was a significant softening of growth trends in rural demand.
- The overall drop witnessed in rural growth was majorly driven by a slow down in the packaged food category.
- The firm, however, highlighted the fact that the slowdown was witnessed amid a lower GDP growth of 6.6%- lower than the earlier projection of 6.8%, and rising inflationary pressure of 2.9% in March from 2% in January.
- While the outlook for the second quarter is pegged at 12-13%, factors like rural consumption and inflationary pressures would influence the growth trajectory in the year.
- Also, rising input and crude prices, exchange rate, reduction in repo rate leading to further liquidity and policy dynamic would have an effect on the demand during the year.
FMCG:
- Fast-moving consumer goods are products that sell quickly at relatively low cost. These goods are also called consumer packaged goods.
- Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian economy with Household and Personal Care accounting for 50% of FMCG sales in India.
- Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector.
- The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India.
- However, in the last few years, the FMCG market has grown at a faster pace in rural India compared with urban India.
Source
The Hindu, ibef.