Nielsen FMCG Growth Snapshot 2020 highlights how the industry shows signs of revival with the Unlock 1.0 after a brief period of decline pointing towards disruption and more factors in the production & the supply chain.
The novel coronavirus (COVID-19) pandemic has led to a disruption in both supply chain and consumer behavior in Q2’20. As India went through the two-month-long lockdown phase, there was a stark decline in macroeconomic factors and consumer confidence.
- A steep decline in consumer confidence Globally as well as in India, on account of personal finance and job concerns.
- Full-year GDP Forecast becomes negative at -5%
- A significant decline in Industrial production post March’20
- Unemployment rates reaching an all-time high of 24% in April’20 and May’20
Thee FMCG industry in the quarter witnessed an unprecedented decline of -17.1%, in April & May but also displayed early signs of revival with the unlock period in June, when the growth moved back to the positive side (4.5% versus the previous year i.e. June ‘19).
Nielsen Retail Audit data was analyzed to pull out some of the salient trends from the quarter that ended in June 2020 with a revised industry growth outlook for this year-
- Unlock 1.0 in June’20, saw a revival of the FMCG industry clocking a growth of 4.5% versus a year ago. The revival was aided by opening up of retail stores and consumers looking at resuming normal consumption levels across categories.
- The pandemic was severe in Indian Metros and Urban centers as compared to the rural areas. The smaller towns and rural markets had a strong bounce back in June, after two months of negative growth during the lockdown.
- North & east saw a shift from negative industry growth of Apr-May to high single-digit growth in June. On the other hand, the West zone that has a relatively higher urban population and had a higher severity of the pandemic continued to decline in June.
- As the situation improved in June, we saw that Traditional Trade and E-Commerce channels bounced back strongly.
- After sharper declines in Apr-May across Non-Food categories, they registered a notable bounce back in June with Unlock 1.0. This recovery was particularly seen among Personal Care and Home Care categories.
- The Traditional Trade channels had the highest impact in the quarter on account of store closures during the lockdown. Modern Trade, on the other hand, had a spike in sales towards the latter part of March and early April when consumers used this channel for up stocking.
- Rural grew 3X across India in June 2020- After witnessing slower growth compared to Urban in Q1’20, Rural markets led the industry revival in June with a double-digit (12%) growth versus June of 2019. At an overall quarter level also, Rural markets were less impacted as compared to their Urban counterpart (11% decline for Rural vs 20% for Urban).
You can see the complete report here: