Small players, rural demand drive 11% value growth in Q4: volume growth slows to 5.1%: NielsenIQ

Even as urban slowdown persisted, rural demand for India’s fast moving consumer goods declined in the January-March '25 quarter year-on-year, though it was still four times faster than in cities, research firm NielsenIQ said in its quarter update on Thursday. Smaller manufacturers drove growth of the sector for the second consecutive quarter, while rural markets outpaced urban growth for the fifth consecutive quarter. India’s FMCG industry grew 11% year-on-year by value sales in the January-March ’25 quarter driven 5.6% increase in prices.

Volume growth, or number of units sold, slowed down in the March quarter to 5.1% compared to 6.1% in the year-ago quarter. NielsenIQ attributed the slower growth to consumers preferring small-value packs amid inflation and cutback on discretionary spending. Volume growth is slowing across categories, and non-food segments are still outpacing food in the FMCG sector, the researcher said.

The research firm tracks data based on company sales to retail channels, while Kantar Worldpanel tracks data based on household sales.


Rural markets, which contribute over a third of overall consumer goods sales in India, grew 8.4% year-on-year by volume compared to 2.6% growth in urban India.

Nestle, Hindustan Unilever, Dabur and Godrej Consumer Products are among the companies that have called out continued slowing urban demand in their March quarter earnings, and cited that they expect urban demand revival over the next four-six quarters. On Wednesday, Dabur, which depends on rural markets for close to half of its annual sales, had flagged that the demand environment remained challenging with high food inflation and a surge in cost of living continuing to limit urban spending.

"In the quarter, rural consumer demand grew at a slower pace compared to Q1 2024, yet it remained four times faster than growth in urban areas, where consumption further decelerated. Rural markets continued to outperform urban counterparts across most regions of India," said Roosevelt D’Souza, head of customer success – FMCG, NielsenIQ India.

He added, however, that with a favourable monsoon forecast and revised tax slabs, consumption is likely to pick up in the upcoming quarters.

Small manufacturers with annual turnover below Rs 100 crore grew 11.9% by volumes, and companies with a turnover between Rs 100 crore to Rs 1,000 crore reported volume growth of 6.4% in the quarter. “Small manufacturers grew twice as fast than the overall FMCG market, gaining ground due to a low base, rural growth and changing market dynamics, though their long-term momentum remains to be seen,” Dsouza said.

He said the sector is showing mixed signals as volume growth is slowing across categories, while non-food segments are outpacing food, and inflation is easing overall, but high edible oil prices are keeping staples expensive.

Traditional trade or sales from neighbourhood kirana stores, increased to 6.2% in the March quarter compared to 5% year-on-year.

E-commerce channels grew drive by increasing online shopper penetration, more purchase occasions, and increasing basket sizes, NielsenIQ said. Within the top eight metros, e-commerce channels reported 13% on-year increase.

Consumption of food slowed to 4.9% in the March quarter, compared to 6% in the previous December quarter, on account of decreased volumes in staple categories such as edible oils and palm oil which saw price increases, NielsenIQ said.