Nielsen slashes FMCG growth forecast by half to 5-6% for 2020

Market research firm Nielsen revised its outlook for the growth of the FMCG segment, downgrading it from 9-10% to 5-6% for this year as a consequence of Covid-19 outbreak. This comes in the backdrop of the industry witnessing early signs of recovery in January and February, however, a lockdown following the outbreak of the virus towards the end of March, impacted quarterly growth rates too.

“FMCG growth for Q1’20 stands at 6.3% against the Nielsen forecast of 8-9%, and this quarter is turning out to be the lowest first quarter in the past three years,” Nielsen said in its report. In the three months 0f 2020, India’s FMCG sector grew 6.3% in value terms, down sharply from the 13.8% growth that the sector witnessed during the same period last year. While January and February saw growth rates improve from the December quarter, the spread of covid-19 in March hit sales of FMCG products resulting in volume growth of just 0.5%.

Within organised trade, modern trade and ecommerce are growing at a faster pace, with 2% contribution over kiranas in the past one year, even though kiranas remain dominant. “The channel shifts are even more amplified in metros where traditional trade salience has dropped by almost five percentage points in the last one year from 73% in Q1 of 2019 to 68% in Q1 2020,” Nielsen added. Modern trade and ecommerce have grown on the back of big sale days like Republic Day and Independence day.