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Nielsen estimates that FMCG companies will face a low year

India’s fast-moving consumer goods (FMCG) growth is going lower as spending in lower centres and slowdown in rural growth is limited. It is according to the firm Nielsen.

The largest market researcher said on Wednesday the growth in the FMCG in April-June 2019 dropped to 10% from a year ago. It was a third consecutive quarter of slowdown.
Nielson said FMCG growth in the first half of 2019 was 12% and earlier it was 13-14%.
Sunil Khiani, Nielsen’s South Asia head of retail measurement service said. “Based on an analysis of key factors, a revised forecast for the year-end 2019 estimates all-India FMCG growth to be in the 9-10% range.” They also added, “Distributors generally operate on cash but during elections, they were cautions to transact carry a higher amount of currency.”

B Krishna Rao, senior category head at Parle Products said: “With a good monsoon and a stable government the situation may improve but growth rate expectations are lower now than what we envisaged during the start of the year.”

According to Khiani said, “However, this quarter has witnessed a slowdown across all food as well as non-food categories, with salty snacks, biscuits, spices, soaps and packaged tea leading the slowdown.”
Nielsen cited four key factors: government policies, macroeconomy, monsoons and low base effect.

Vivek Gambhir, MD of Godrej consumer products said last week that “Over the last few quarters, FMCG in rural has grown ahead of urban. However, the pace of rural growth has been slower than historically, when rural was growing more than twice the growth of urban. Our hope is that the government’s efforts to revive the rural economy should lead to better rural growth in the second half of this fiscal year. To deal with the slowdown, we are focusing on driving volume growth through new product launches and consumer offers, as well as fast-tracking growth in alternate channels such as modern trade and e-commerce.”

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