FMCG Volume Growth Slows to 5.1% in Q1 2024, Rural Demand Cushions Metro Weakness

FMCG Volume Growth Slows to 5.1% in Q1 2024, Rural Demand Cushions Metro Weakness

May 10, 2025 | Consumer Markets & Retail Trends | By IndyaStory Media Network Pvt. Ltd.

India’s fast-moving consumer goods (FMCG) sector recorded a slower volume growth of 5.1% in the March 2024 quarter, down from 6.1% in the previous quarter, as per the latest findings from NielsenIQ. The deceleration is primarily attributed to a shift in consumer behavior toward lower-value packs, reflecting caution in discretionary spending.

Rural Demand Offsets Urban Drag

While overall growth moderated, rural markets remained a strong pillar for the industry, showing continued recovery and outpacing urban centers, especially metros, where volume growth was subdued. This trend highlights the increased price sensitivity in urban areas, particularly among middle-income households navigating inflationary pressures.

“Rural markets are showing signs of resilience, supported by improving incomes and a return to near-normal consumption patterns,” said a NielsenIQ spokesperson.

Food vs Non-Food: A Mixed Bag

Volume growth across non-food categories like personal care and home hygiene outpaced food segments, continuing a trend from the previous quarters. However, food items—especially staples—have seen tepid growth, possibly due to pack-size optimization and fewer promotional activities by manufacturers.

Key Market Observations

• Small pack purchases surged, indicating value-conscious buying behavior.

• Tier II and Tier III towns showed steady growth, while metros like Delhi and Mumbai witnessed stagnation or slight contraction in volumes.

• Price-led growth is plateauing, making volume growth the key indicator of real demand recovery.

Industry Outlook By LineUp

Despite the current slowdown, industry experts remain cautiously optimistic. Many FMCG companies are investing in distribution expansion, especially in rural belts, while also diversifying product portfolios to address shifting consumption patterns.

The upcoming monsoon season and festive period are expected to play a vital role in stimulating demand. If rural incomes remain stable and inflation eases, volume growth could regain momentum in the second half of 2024.

Final Thoughts

India’s FMCG sector continues to navigate a complex consumption landscape, balancing between urban caution and rural resilience. While the slowdown in metro volumes is a concern, the sustained performance in rural areas offers a cushion for the industry. Strategic pricing, innovation in pack sizes, and targeted rural outreach will likely shape the sector’s trajectory in the months ahead.

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