Hit by lockdowns, FMCG sector likely to witness flat growth this year: Nielsen

New Delhi: India's fast moving consumer goods (FMCG) sector is expected to witness flat growth in 2020 as demand was adversely impacted by stringent lockdowns and store closures following the outbreak of the novel corona virus, market research firm Nielsen said.

Nielsen had, in April, projected a growth of 5-6 per cent for the industry this year revising it's original forecast of 9-10 per cent in January.

Despite sales reviving to near pre-Covid levels in June, the industry registered a negative growth of around 17.1 per cent in the second quarter compared to the 6.3 per cent growth registered in January-March quarter, showed data released by the firm.

The industry registered a growth of around 4.5 per cent in terms of value in June compared to the same period last year. In April and May, however, the growth fell 28 per cent compared to the same period in 2019.

This is the worst quarter that the industry has seen in a long time,” said Prasun Basu, president, South Asia Zone, Nielsen Global Connect.

However, the firm expects an increase in demand in October-December quarter on account of the festive seasons. July-September quarter is also likely to see some growth.

Non-food items and high margin premium segment are witnessing a strong recovery since the unlocking of the economy as categories, such as, personal care and home care grew strongly in June, said Nielsen.

"Rural India has been comparatively insulated from Covid-19 so far, however its spread is now reaching the hinterland. Having said that, we do expect an overall positive uptick due to reverse migration," said Nielsen.

Rural India contributes around 36 to 37 per cent of the total FMCG sales, bulk of which is contributed by food items.

During the second quarter, both traditional trade channels and ecommerce bounced back, while growth for modern trade fell further.