Rural demand for packaged goods remains weak in December quarter

Packaged consumer goods such as soaps, detergents, and snacks saw tepid demand in rural India in the December quarter, triggering concerns over FMCG sales volumes, according to industry analysts.

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Volume growth in rural markets is likely to be either flat or may see a minor dip year-on-year, lagging volumes in urban markets, they said.

"Although moderating inflation in diesel and fertilizer costs augurs well for the rural segment, we forecast volume growth for most players shall remain challenging in Q3FY24 and possibly even Q4FY24," Abneesh Roy of Nuvama Institutional Equities said in a report on Tuesday.

Weaker-than-expected winter and festive demand, rainfall deficit and unseasonal rains hit growth in rural India in Q3FY24 and possibly Q4FY24. "This led to muted volume growth for most players in Q3FY24. The last five to six quarters have been the longest periods of rural slowdown in the last decade," Roy said.