New Delhi, Rural India remains a "shining star" for sales growth of fast-moving consumer goods and the region is expected to maintain a better pace of expansion than urban areas in the second quarter of 2024, according to a report from Friday.
According to a report by data, insights and consulting firm Kantar, rural India will maintain "better levels of growth" ahead of urban markets for fast-moving consumer goods (FMCG) companies in the second quarter (April-June) of 2024.
The report calls the rural market a "shining star" and says it had a "resurgence" in 2024. While the urban market is likely to remain under pressure, the rural market can consolidate its position in the second quarter of the year, it said.
This growth in rural areas is helped by the region-focused measures adopted by the government in the interim budget earlier this year, which provided stability.
Additionally, populist measures are expected in some states facing elections this year, according to Kantar FMCG's pulse report for the second quarter.
"We must also keep in mind that more states will head to the polls in the coming months and that in the second half we should only see an increase in populist measures for the rural market. After COVID-19, the rural market was struggling and faced a decline in recent successive quarters.
"However, the start to 2024 from a rural perspective has been bright, with rural growth outpacing urban growth - and the rural worm is looking up," he said.
As for the urban market, according to the report, it recorded no growth for three consecutive quarters and faces a huge base in the second quarter of 2023.
"Therefore, Urban is likely to remain under stress, while Rural may consolidate its position in the second quarter," he said, adding that the falling Urban curve, coupled with a solid base, will likely constrain numbers for the next few quarters. quarters.
According to K Ramakrishnan, managing director for South Asia, Kantar Worldpanel, for most of 2023, Urban has maintained strong growth numbers.
"Rapid growth is unsustainable in the long term, and Urban is necessarily slowing down now. This has also coincided with typically urban categories, such as noodles and salty snacks, slowing their growth within Urban, after galloping continuously since the pandemic," he said . saying.
The rural market could also get a boost from the rabi harvest, the report said, although its status is unclear.
"Central India, where most of the rural population resides, received excess rainfall during the year. South India, a major producer of rice and spices, has received below-normal rainfall so far. "There are reports that rabi crops are likely to be affected this year," he said.
The effect of rainfall will be felt even more towards the second half, but "some rural markets could already activate the caution switch," according to the report.
"Even with that, we expect rural areas to maintain better growth levels compared to urban areas for the rest of the year," he added.
Typically, rural areas contribute 35 to 37 percent of consumer goods sales, and dominate value offerings in the food segment.
The report also highlighted that, although inflation may have slowed to acceptable levels, its effects are not going unnoticed by the consumer.
"The Indian rural market is full of potential. Yes, inflation has dampened the rural buyer's mood for a while, but the trends are now pointing upwards. The rural sector has outperformed the urban sector this quarter and is likely to continue at that level for some time in the near future," Ramakrishnan said.
According to a report by data, insights and consulting firm Kantar, rural India will maintain "better levels of growth" ahead of urban markets for fast-moving consumer goods (FMCG) companies in the second quarter (April-June) of 2024.
The report calls the rural market a "shining star" and says it had a "resurgence" in 2024. While the urban market is likely to remain under pressure, the rural market can consolidate its position in the second quarter of the year, it said.
This growth in rural areas is helped by the region-focused measures adopted by the government in the interim budget earlier this year, which provided stability.
Additionally, populist measures are expected in some states facing elections this year, according to Kantar FMCG's pulse report for the second quarter.
"We must also keep in mind that more states will head to the polls in the coming months and that in the second half we should only see an increase in populist measures for the rural market. After COVID-19, the rural market was struggling and faced a decline in recent successive quarters.
"However, the start to 2024 from a rural perspective has been bright, with rural growth outpacing urban growth - and the rural worm is looking up," he said.
As for the urban market, according to the report, it recorded no growth for three consecutive quarters and faces a huge base in the second quarter of 2023.
"Therefore, Urban is likely to remain under stress, while Rural may consolidate its position in the second quarter," he said, adding that the falling Urban curve, coupled with a solid base, will likely constrain numbers for the next few quarters. quarters.
According to K Ramakrishnan, managing director for South Asia, Kantar Worldpanel, for most of 2023, Urban has maintained strong growth numbers.
"Rapid growth is unsustainable in the long term, and Urban is necessarily slowing down now. This has also coincided with typically urban categories, such as noodles and salty snacks, slowing their growth within Urban, after galloping continuously since the pandemic," he said . saying.
The rural market could also get a boost from the rabi harvest, the report said, although its status is unclear.
"Central India, where most of the rural population resides, received excess rainfall during the year. South India, a major producer of rice and spices, has received below-normal rainfall so far. "There are reports that rabi crops are likely to be affected this year," he said.
The effect of rainfall will be felt even more towards the second half, but "some rural markets could already activate the caution switch," according to the report.
"Even with that, we expect rural areas to maintain better growth levels compared to urban areas for the rest of the year," he added.
Typically, rural areas contribute 35 to 37 percent of consumer goods sales, and dominate value offerings in the food segment.
The report also highlighted that, although inflation may have slowed to acceptable levels, its effects are not going unnoticed by the consumer.
"The Indian rural market is full of potential. Yes, inflation has dampened the rural buyer's mood for a while, but the trends are now pointing upwards. The rural sector has outperformed the urban sector this quarter and is likely to continue at that level for some time in the near future," Ramakrishnan said.
