India’s Fast Moving Consumer Goods (FMCG) sector has encountered a key challenge in recent quarters: weak demand from rural markets. During this period, urban market has remained stable. Currently, urban markets contribute to 60% of the total consumption in the FMCG sector, with the remaining 40% coming from rural markets.
According to a study by Bizom, a mobile platform for retail commerce, a substantial portion of FMCG industry revenue is derived from the top 75 cities in India, each with a population of 5,00,000 and above. These cities alone account for approximately 40% of the industry's earnings. Conversely, the remaining 60% is generated from rural India. This underscores the critical importance of revitalizing demand in rural markets for the growth of the FMCG sector in India.
With 2024 being an election year, there’s a heightened focus on rural markets. The crucial question occupying investors’ minds is: Will demand in India’s rural markets experience a resurgence? Let us understand this in greater detail:
THE PRESENT SITUATION
In the December ’23 quarter, early signs of demand revival emerged in India's FMCG sector. According to a recent study by market research firm NielsenIQ, the volume of the Indian FMCG industry grew by 6.4% year-on-year in the December ’23 quarter. An improvement in consumption was observed in both urban and rural areas, as highlighted in a report by the analytics firm. The report underscores that the consumption gap between urban and rural markets in India is narrowing for the first time in 2023. It further notes that higher volume and a recovery in rural markets contributed to the FMCG industry’s 6% growth in value terms.
This story is from the March, 2024 edition of Beyond Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the March, 2024 edition of Beyond Market.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
IMPORTANT JARGON
TRANSITIONING SFBs TO UBs: RBI’s NEW GUIDELINES - The Reserve Bank of India recently issued new guidelines outlining the transition process for Small Finance Banks (SFBs) to become Universal Banks (UBs).
NAVIGATING INDIA'S MARKET WITH HOWARD MARKS
Howard Marks' focus on cycles and capital preservation translates to a defensive strategy for India's frothy market: prioritize cash, target undervalued sectors, and diversify
FINDING A BETTER FIT
Switch health insurers at renewal to keep benefits such as waiting period and bonus, but weigh drawbacks
SILVER SQUEEZE
Green tech boom strains supply, propelling silver as a sustainable investment
A PODCASTING FUTURE
India's podcast scene explodes with formats and listeners, primed for digital growth, with high-quality content reigning supreme
BOUNCING BACK WITH DOMESTIC FOCUS
Despite challenges, India's tyre industry remains optimistic about doubling revenue by 2032
HIGHWAY HICCUPS?
Slowdown in awarding highway projects, driven by industry factors and project complexities, pushes NHAI towards debt reduction and private partnerships for sustainable development
CONTENT CONQUEST
JIOCINEMA'S ULTRA-LOW PLAN SHAKES INDIA'S STREAMING SCENE, AIMING FOR AD REVENUE AND LEVERAGING STRENGTHS TO BECOME A BIG PLAYER
CAUGHT BETWEEN CAUTION AND GROWTH
RBI's draft on project financing seems to be a pre-emptive measure to prevent large defaults on infrastructure loans. However, in their current form, the requirements look onerous for banks
HOT OR HYPE?
India's 2024 IPO market sizzles with investor cash, but will it be a blockbuster or a box office flop? Valuation worries linger
