Rural India's consumer demand outpaces urban areas for fifth straight quarter, NielsenIQ says
May 8 (Reuters) - India's consumer goods sector reported an 11% growth in value in the March quarter, as rural growth outpaced that in urban areas for the fifth straight quarter, market research firm NielsenIQ said on Thursday.
Rural areas - which account for just over a third of overall consumer goods sales - have become a bright spot for an industry that is struggling with higher living costs and slow wage growth in large cities.
"Rural markets continue to drive growth, whereas urban metros continue to see a shift toward E-commerce," Roosevelt Dsouza, head of customer success for consumer goods at NielsenIQ, said.
Although rural consumption growth slowed in the March quarter, with volumes rising 8.4% compared to 9.2% in the previous three months, it still outpaced urban demand, where growth decelerated to 2.6% from 4.2%.
Price increases also contributed to the overall value growth, with the cost of staples such as edible oil rising 5.6% during the quarter, compared with just 0.3% in the same period a year ago.
Low base, rural growth, and easing inflation are helping smaller players, which saw 17.8% growth in value, outpacing the broader FMCG market, the report said.
Indian consumer goods maker Marico (MRCO.NS), opens new tab reported fourth-quarter profit above analysts' expectations, boosted by improving rural demand and price increases for its key packaged oil brands—underscoring the strength of non-urban markets.
The company also said it plans to expand its presence in villages across India.
Smaller manufacturers are driving consumption compared to larger players, whose volume growth has halved compared to the December quarter, NielsenIQ said.
Hindustan Unilever (HLL.NS), opens new tab and Nestle India (NEST.NS), opens new tab reported weaker fourth-quarter profits, with Hindustan Unilever cutting its margin forecast amid high commodity costs and sluggish urban demand.
Going ahead, NielsenIQ said revised tax slabs and a favorable monsoon forecast could further lift consumption in the coming quarters.
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